2 0 0 4 A N N U A L R E P O R T / E N E R S I S
Enersis Management
CHAIRMAN
Pablo Yrarrázaval
Phone (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Phone (56-2) 353 4613
REGIONAL PLANNING AND CONTROL OFFICER
Macarena Lama
Phone (56-2) 353 4684
REGIONAL FINANCIAL OFFICER
Alfredo Ergas
Phone (56-2) 630 9587
REGIONAL ACCOUNTING OFFICER
Fernando Isac
Phone (56-2) 353 4685
COMMUNICATIONS OFFICER
José L. Domínguez
Phone (56-2) 353 4666
AUDITING OFFICER
Francisco Herrera
Phone (56-2) 353 4647
HUMAN RESOURCES OFFICER
Francisco Silva
Phone(56-2) 353 4610
GENERAL COUNSEL
Domingo Valdés
Phone (56-2) 353 4631
Investor and Shareholder Relations
CHIEF INVESTMENTS AND RISKS OFFICER
Ricardo Alvial
Phone (56-2) 353 4682
CITIBANK NY
Ricardo Szlezinger
Phone (1-212) 816 6852
SANTANDER CENTRAL HISPANO INVESTMENT
Enrique Romero
Phone (34-91) 342 9681
S
I
S
R
E
N
E
/
T
R
O
P
E
R
L
A
U
N
N
A
4
0
0
2
Santa Rosa 76, Santiago - Chile
(56 2) 353 4400, (56 2) 378 4400
Fax: (56 2) 378 4788
w w w. e n e r s i s . c l
S A N T I A G O S T O C K E X C H A N G E
ENERSIS
N E W Y O R K S T O C K E X C H A N G E ( N Y S E )
ENI
L A T I N A M E R I C A N S T O C K E X C H A N G E
O F M A D R I D S T O C K E X C H A N G E ( L A T I B E X )
XENI
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
Enersis Management
CHAIRMAN
Pablo Yrarrázaval
Phone (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Phone (56-2) 353 4613
REGIONAL PLANNING AND CONTROL OFFICER
Macarena Lama
Phone (56-2) 353 4684
REGIONAL FINANCIAL OFFICER
Alfredo Ergas
Phone (56-2) 630 9587
REGIONAL ACCOUNTING OFFICER
Fernando Isac
Phone (56-2) 353 4685
COMMUNICATIONS OFFICER
José L. Domínguez
Phone (56-2) 353 4666
AUDITING OFFICER
Francisco Herrera
Phone (56-2) 353 4647
HUMAN RESOURCES OFFICER
Francisco Silva
Phone(56-2) 353 4610
GENERAL COUNSEL
Domingo Valdés
Phone (56-2) 353 4631
Investor and Shareholder Relations
CHIEF INVESTMENTS AND RISKS OFFICER
Ricardo Alvial
Phone (56-2) 353 4682
CITIBANK NY
Ricardo Szlezinger
Phone (1-212) 816 6852
SANTANDER CENTRAL HISPANO INVESTMENT
Enrique Romero
Phone (34-91) 342 9681
S
I
S
R
E
N
E
/
T
R
O
P
E
R
L
A
U
N
N
A
4
0
0
2
Santa Rosa 76, Santiago - Chile
(56 2) 353 4400, (56 2) 378 4400
Fax: (56 2) 378 4788
w w w. e n e r s i s . c l
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
C O N T E N T S
4
1 0
1 2
1 8
2 4
2 7
2 8
2 9
3 2
3 4
3 7
4 2
44
4 5
4 6
4 8
5 2
5 6
6 0
6 2
6 6
7 0
7 4
7 8
8 2
8 8
9 1
9 4
9 7
9 8
CHAIRMANS' LETTER TO SHAREHOL DE RS
HIGHLIGHTS OF 2004
THE COMPANY
OWNERSHIP AND CONTROL
BOARD OF DIRECTORS
DIRECTORS’ COMMITTEE
ORGANIZATIONAL STRUCTURE
ENERSIS MANAGEMENT TEAM
CULTURAL ACTIVITIES
FINANCIAL ACTIVITIES
BUSINESSES
INVESTMENT AND FINAN CING POL ICY FOR 200 4
COMPARATIVE FINANCIAL S TATEME N TS
CORPORATE STRUCTURE
ENERSIS GROUP STRUCTURE
ENDESA CHILE GROUP STRUCTUR E
ELECTRICITY GENERATION
ENDESA CHILE
ENDESA FORTALEZA
ELECTRICITY DISTRIBUTION
COMPARATIVE OPERATIN G DATA
CHILECTRA
EDESUR
EDELNOR
CERJ (AMPLA)
COELCE
CODENSA
OTHER BUSINESSES
SYNAPSIS
CAM
INMOBILIARIA MANSO DE VELASC O
DECLARATION OF RESPON SIB ILITY
OTHER SUBSIDIARY AND ASS OC IATE C OMPANIE S
1 13
COMMERCIAL RELATIONS W ITH SU B SIDIARY AND AS SOCIATE COMPAN IES
1 15
2 57
2 97
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATE MENTS
UNCONSOLIDATED F INANCIAL STATE MENTS
FINANCIAL STATEMENTS OF S UBS IDIARY C OMPANIE S
3
Ralco hydroelectric plant.
N O M B R E D E L C A P I T U L O
N O M B R E D E L C A P I T U L O
4
C H A I R M A N S ’ L E T T E R T O S H A R E H O L D E R S
It is an honor for me to inform you of the principal activities of Enersis and its subsidiary
companies during 2004 which have been summarized in this Annual Report which is presented for your
consideration.
2004 was characterized as being one of consolidation of our financial recovery nationally and
internationally following the making of the necessary timely adjustments in order to face the economic
and social reality of the markets in which we operate.
Year after year, we have been setting realistic targets which we have fully met. 2004 will remain
engraved in the history of our Group for being one of take-off in terms of good financial results. We had
already, in 2003, made significant achievements with profits of Ch$12,780 million, but these have now
trebled to Ch$44,308 million in 2004.
This result speaks for itself with respect to the good performance of Enersis and its subsidiaries
throughout the whole electricity business chain and in the five countries where the Group has a presence.
This is also reflected in the company’s operating income which increased 15.4% to Ch$634,202 million.
Also notable was the 5.5% increase in electricity sales, both in generation and distribution, which
confirms the projections made by our companies for achieving sustained growth within that range.
The continuous increase of our distribution customers means that today we have close to 11 million
electrical connections in the six cities where we provide electricity. We are constantly making improvements
which we can measure, for example, in the increase in labor productivity, which grew by 6.4% to 1,521
customers per employee.
But these good signs are also related to projects that our subsidiaries ventured on in 2004, including
one that marks a milestone for us. I refer to the inauguration and start-up of Endesa Chile’s Ralco project,
an unprecedented event in the history of Chile as it is the largest hydroelectric plant in the country which
provides important energy support for the Central Grid System (SIC) with a maximum capacity of 690
MW. This has been completed despite many years of unfounded criticisms and has managed to combine
respect for the environment with unbeatable solutions for the whole Pehuenche population that was
affected by the passage of modern times.
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2 0 0 4 A N N U A L R E P O R T / E N E R S I S
5
This hydroelectric plant joins the outstanding contribution made by the Endesa Fortaleza plant in
Ceará State in Brazil which started operating in early 2004 and added 319 MW of capacity for sustaining
the electricity needs of north-eastern Brazil.
Just as the balance sheet reflects good situation, so do the financial ratios which continue to show
considerable improvements. This is reflected in the healthy financial structure of Enersis whose liquidity
increased and access to the financial markets improved. Particularly notable was the successful debt
renegotiation in November 2004 when Enersis signed a loan agreement for US$ 350 million for the
refinancing of the company’s debts. This new loan has substantially better conditions than the previous
ones, with a Libor interest margin of 37.5 basis points compared to the previous margin of 115 basis points,
and a term extended from 2006 to 2008.
This new financial reality allows the Enersis Group to have a maturity pattern that better matches
the characteristics of the electricity market where it operates. And what is even better, it has enabled the
group to reduce its average financial debt last year by some US$1,228 million.
One of the key improvements in the financial field has been the favorable change in EBITDA which
has grown strongly, increasing over the last two years by more than US$450 million to a total of US$1,831
million at December 31.
The perception of risk therefore has improved ostensibly, a situation noted by the credit-rating
agencies which have begun to raise the company’s rating. This occurred together with a rise in the share
price and the reduction in risk spreads, both in the cost of bank borrowings and the risk premium demanded
on the company’s bonds.
The improved liquidity explains why Enersis’s shares are more sensitive to the decisions of investors
in the face of economic or market conditions. This was evident from the rise in the share price which ended
the year at Ch$93.66, an 8.9% increase over the year, while the ADR rose 15.6% to US$8.51.
In other hand it is a matter of satisfaction to know that our professional teams have been improving
internal controls and procedures in order to comply with the requirements of the Sabarnes Oxley Act,
concluding that these controls and procedures are effective to a reasonable level of reliability for the
C H A I R M A N S ’ L E T T E R T O S H A R E H O L D E R S
6
collection, analysis and publishing of the information required from the company. In the same context,
the finance management developed a so-called regulations and procedures project which is an extension
of the rigor of that law to all aspects of the company’s financial management.
With respect to our shareholders, we are sure we have done an efficient job in communicating with
them and keeping them informed of our company’s actions. This was reflected in two important prizes
received during the year.
The first place, that was won for the investor relations web site, in the category TOP 5, “Best Investor
Relations Website” awarded by the company MZ Award in this part of the world, called “Southern Cone”,
which consists of all Spanish-speaking South American countries.
The other award was given by the prestigious magazine “Institutional Investor” that annually
gives prizes for Latin American companies whose shares are traded in the United States. Enersis was
distinguished as being the best electrical company in the region in the Investor Relations category. The
prize was instituted to recognize the company that has been known during the year for its optimum
transparency and pro-activity in the provision of information to national and international investors in
compliance with several strict requirements, while the evaluation criteria are based on a confidential
survey made to the principal analysts and investors interested in the region.
An important and symbolic landmark occurred on June 22 when the New York Stock Exchange
celebrated Enersis Day, enabling our company to celebrate 11 years of trading on that important stock
market and to present its new corporate image to the market.
Enersis, being the star of the day, closed trading activities with the traditional “Ring the Bell”, in
recognition of the years that the company has listed its stock on the New York Stock Exchange (NYSE).
Considering Enersis’s position in the market, as the Latin American investment vehicle for Endesa
(Spain), it decided to launch a new corporate image to reflect this relationship through a new logo. Since
then, Enersis has a renewed corporate image that strongly and clearly expresses the international support
provided by one of the world’s largest electricity groups.
In the social field, I should mention the impetus with which our companies are tackling their
commitment with their surroundings, the environment, their communities and customers. Social
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
7
responsibility today is a pillar of our actions as demonstrated by the numerous
actions being carried out day by day in various aspects directly or indirectly affecting
our society, which speaks very well for our company as it reaffirms the business
maturity and balance with the environment in which we carry on our business.
We are making dozens of contributions in social, cultural, educational and
environmental aspects. A social responsibility policy has been percolating little
by little through the Group and the efforts of all our companies have focused on
the matters that are most closely related to their surroundings and direct areas
of action.
Pablo Yrarrázaval Valdés
Chairman of Enersis
Despite the many actions in the social responsibility area, we can point out
projects like “Illuminating Churches in the South of the World” which, in four years,
has managed to illuminate and adorn 47 churches and religious temples in Chile, Colombia and Peru.
Education and information on electricity is also a matter that is strengthened every year, for which our
companies have been especially dedicated through visitor centers and inter-active showrooms for the
better teaching of children, young people and even adults.
The subsidiaries in Chile have been involved in important projects. The best example is Endesa Chile’s
Fundación Pehuén, an integral project that has spent ten years working for the welfare of the Pehuenche
families in the Upper Bío Bío, near the Ralco plant. The generator is also involved in the Huinay Project
developed in Chile’s extreme south through a cientific ofield station unique to the continent for the study
of biodiversity over an area of 35,000 square kilometers.
The contributions of the Chilectra subsidiary include a dozen activities in various cultural aspects,
from the opening of its photographic archives to the whole community to arranging a successful national
poetry competition. However, the most notable action in this area is its general sponsorship of Santiago’s
International Book Fair, the largest cultural show in Chile and involving an agenda of more than 200
book-related artistic-cultural expressions over two weeks.
Important changes have been made in our companies relating to their internal organization. In
some cases, these have implied complicated restructurings that have been the only way to move ahead
in the process of optimization and innovation, which is the challenge that our companies have in an
ever-more competitive world.
C H A I R M A N S ’ L E T T E R T O S H A R E H O L D E R S
8
The most concrete examples, among many, are in the distribution companies Chilectra and Cerj. In
both cases, but with their particularities, enormous efforts have been made to modernize performance
and make it more dynamic, in order to successfully face the demanding service quality standards that
the market imposes.
In Chile, under the slogan “Chilectra 21st Century”, the distributor has made internal and external
changes in all service areas and a long-term challenge which coincides with its declaration of principles
of being the leading company in distribution, the sale of electricity and related services, recognized and
valued alike by its customers, employees, shareholders and the community.
For its part, the Río de Janeiro State distributor, Cerj, completely changed its image and became
known as Ampla. This, together with an effort to optimize the technical and commercial work, represents
a renewed challenge to position the company closer to and with a better service for its more than 2 million
customers.
We must recognize the contributions made by thousands of employees who daily give of their best
to make our performance a corporate success, adjusting to the changes in the business and facing the
challenges with enthusiasm and creativity. We should also thank the contributions of those executives
and professionals who have left, as well as welcome, the new wisdom that enters full of ideas and spirit
for making this the most important private-sector multinational electricity group in Latin America.
I should also mention the results of the working climate survey made to all employees of Endesa,
both in Europe and in Latin America. In our continent, the satisfaction indicator was 73%, compared to
62% in 2002 when the previous survey was made. In global terms, the opinions have improved to a
greater or lesser extent in all the matters analyzed, especially those relating to customer orientation
and valuation by the person directly responsible hierachically, all indicate that internally (part of our
social responsibility), improvements and efforts have been made to further optimize the situation of our
employees who today total over eleven thousand people.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
9
This is a brief summary of a year which was very positive for us and which, without any doubt,
opens up for us the prospect of future growth in all areas of our electricity business, confident that we
are following the correct path for making this company a model in corporate management, concerned
about its customers, with an important role in society and seeking a just return for you who have placed
your trust in this company. We thank you for this trust and you may be assured that our commitment will
be to improve day by day to the satisfaction of everyone: shareholders, customers, the community and
employees.
Pablo Yrarrázaval Valdés
Chairman
ENERSIS S.A.
C H A I R M A N S ’ L E T T E R T O S H A R E H O L D E R S
10
H I G H L I G H T S O F 2 0 0 4
THE FO LLOWI N G ARE THE E VENTS O F IMP O RTANCE I N 20 04
•
Net income for the year increased significantly by 246.7%, from Ch$12,780 million
to Ch$44,308 million.
•
Consolidated operating income rose by 15.4% from Ch$549,498 million to
Ch$634,202 million.
•
Generation business energy sales increased by 5.5%, from 50,634 GWh to 53,444
GWh. Those of the distribution business increased by 5.5% from 49,577 GWh to
52,314 GWh.
•
Labor productivity in electricity distribution improved by 6.4% from 1,429 to 1,521
customers per employee, confirming the Group’s progress in efficiency.
•
The customers served by Group companies increased by 4.2% from 10.4 million
to 10.9 million, in line with average annual demographic growth.
•
The Endesa Fortaleza thermal plant, in north-east Brazil, started operating in
January 2004 with a maximum installed capacity of 319 MW.
•
The Ralco hydroelectric plant, of the subsidiary Endesa Chile, was commissioned
in September 2004. Its installed capacity is 690 MW, thus allowing it to strengthen
Chile’s Central Grid System (SIC) by providing 9% of its total energy.
•
The value of Enersis increased by 8.9% during the year while the value of its ADR
grew by 15.6%, taking into account the appreciation of the Chilean peso against
the US dollar.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
11
•
The healthy financial structure of Enersis enabled the company to improve its
liquidity and its access to the financial markets. An important confirmation of this
is the new market perception which allowed the company to renegotiate its debt
at a tenth of the margins existing in 2003.
•
Enersis received first prize as the Investor Relations Best Web Site in the Southern
Cone, reflecting the excellence in this matter in the Electrical Companies category and
as the best electricity company in the region in the Investor Relations category.
•
In recognition of its successful presence in the United States market, Enersis
celebrated 11 years of listing on the New York Stock Exchange (NYSE) with a
symbolic ceremony called “Enersis Day” at that exchange. Representatives of that
stock market spoke of Enersis as the most innovative and traded company among
Chilean quoted companies.
•
Enersis renewed its corporate image which now expresses the international support
provided by Endesa, its controlling shareholder, strongly and clearly by integrating
in its logo the characteristic sparkle of the Spanish multinational. The launch of
this new logo was made in June 2004 at the “Enersis Day” ceremony.
H I G H L I G H T S O F 2 0 0 4
12
T H E C O M P A N Y
Name
Kind of Company
Tax No.
Address
Telephones
Fax
PO Box
Web Site
Electronic Mail
Securities Registry No.
External Auditors
Subscribed and Paid Capital (ThCh$)
:
:
:
:
:
:
:
:
:
:
:
:
ENERSIS S.A.
Open corporation
94,271,000 - 3
Santa Rosa No76, Santiago, Chile
(56-2) 353 4400 - (56-2) 378 4400
(56-2) 378 4788
1557, Santiago
www.enersis.com
comunicacion@e.enersis.cl
Nº 175
Deloitte & Touche
2,283,404,124
Chilean Stock Exchanges Ticker Code
:
ENERSIS
New York Stock Exchange Ticker Code
Madrid Stock Exchange Ticker Code
ADR Program Custodian Bank
ADR Program Depositary Bank
Latibex Custodian Bank
Latibex Link Entity
Chilean Credit Rating Agencies
International Credit Rating Agencies
:
:
:
:
:
:
:
:
ENI
XENI
Banco de Chile
Citibank N.A.
Banco Santander
Santander Central Hispano Investment S.A
Feller Rate, Fitch, Humphrey’s
Fitch, Moody’s y Standard & Poor’s
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
13
N O M B R E D E L C A P I T U L O
N O M B R E D E L C A P I T U L O
Ralco hydroelectric plant.
14
City of Niteroi that receives
çelectricity from Cerj (Ampla)
Constitution Details: The company predecessor of Enersis S.A. was constituted with the name of
Compañía Chilena Metropolitana de Distribución Eléctrica S.A., under public deed dated June 19, 1981
signed before the Santiago notary Patricio Zaldívar Mackenna and amended by public deed dated
July 13 the same year and signed before the same notary. Its existence was authorized and its bylaws
approved by Resolution No.409-S of July 17, 1981 of the Superintendency of Securities and Insurance
(SVS). The extract of these two documents was inscribed in the Santiago Trade Register (folio 13,099
No.7,269) for 1981, and was published in the Official Gazette on July 23, 1981. The bylaws have since
been the subject of various amendments. On August 1, 1988, the company became known as Enersis
S.A.. The last amendment is that appearing in a public deed dated May 19, 2004 signed before the
Santiago notary Patricio Zaldívar Mackenna, whose extract was inscribed in the Santiago Trade Register
(folio 16,876 No.12,702) for 2004, and was published in the Official Gazette on June 5, 2004.
Historical Summary: On June 19, 1981, Compañía Chilena de Electricidad S.A. created a new corporate
structure resulting in a parent company and three subsidiary companies. One of them was Compañía
Chilena Metropolitana de Distribución Eléctrica S.A.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
15
CIEN, interconnection line
between Brazil and Argentina.
In 1985, under the privatization policy set by the Chilean government, the transfer of the share capital of
Compañía Chilena Metropolitana de Distribución Eléctrica S.A. to the private sector was begun, which
process was completed on August 10, 1987. In this process, pension fund management companies
(AFPs), employees of the same company, institutional investors and thousands of small investors
became shareholders in the company. The organizational structure was based on operative activities
or functions whose achievements were evaluated functionally, and its profitability was limited by a
tariff scheme because of the company’s exclusive dedication to electricity distribution. In 1987, the
company’s board proposed a division of the different activities of the parent company. Four subsidiaries
were therefore created to allow their management as business units with their own objectives, thus
expanding the business of the company into other non-regulated businesses but still related to the main
business. This division was approved by an extraordinary shareholders’ meeting held on November 25,
1987 which determined its new corporate objects. Compañía Chilena Metropolitana de Distribución
Eléctrica S.A. therefore came to have the nature of an investment company. On August 1, 1988, as
agreed by the ordinary shareholders’ meeting of April 12, 1988, one of the companies born from the
division changed its name to Enersis S.A.
T H E C O M P A N Y
16
Enersis Corporate Purpose: The purpose of the company are to explore, develop, operate, generate,
distribute, transmit, transform and/or sell energy in any of its forms or nature, in Chile or abroad,
either directly or through other companies, and activities in telecommunications and the provision
of engineering in Chile or abroad. It also has the object of investing and managing its investments in
subsidiary and associate companies that are generators, transmitters, distributors or sellers of electrical
energy or whose business is related to any of the following: (i) energy in any of its forms or nature; (ii)
the supply of public utilities or those which have energy as their principal input; (iii) telecommunications
and information technology; and (iv) internet trading activities. In compliance with its principal object,
the company shall develop the following functions: a) promote, organize, constitute, modify, dissolve
or liquidate companies of any kind whose objects are related to those of the company; b) propose
to the subsidiary companies investment, financing and commercial policies, as well as accounting
systems and criteria which they should follow; c) supervise the performance of its subsidiaries; d)
provide its subsidiary or associate companies with the financial resources necessary for developing their
businesses and provide its subsidiaries with management services, financial, commercial, technical and
legal advice, auditing services and in general services of any kind that appear necessary for their best
performance. Apart from its principal object and acting always within the limits set by the Investment
and Financing Policy approved by the ordinary shareholders’ meeting, the company may invest in i)
the acquisition, exploitation, construction, rental, administration, intermediation, commercialization
and disposal of all kinds of movable and immovable assets, directly or through subsidiary or associate
companies, ii) all kinds of financial assets including shares, bonds and debentures, trade paper and in
general all kinds of securities and contributions to companies, whether directly or through subsidiary
or associate companies.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
17
N O M B R E D E L C A P I T U L O
N O M B R E D E L C A P I T U L O
Endesa Fortaleza plant.
18
O W N E R S H I P A N D C O N T R O L
OWN ERSH IP STRUC TU RE
The capital of the company is divided into 32,651,166,465
32,651,166,465 shares were subscribed, paid and held at
shares of no par value and all of the same and sole series.
December 31, 2004, in the following manner:
S HA R E HO L DE R
NUM BER O F
SHAR EHOLD ER S
NUM BER O F SHA RE S
%
Endesa Internacional S.A.
AFP’s
ADRs (Citibank N.A. per SVS Circular No.1375)
Stockbrokers, Mutual Finds & Insurance Companies
Foreign Investments Funds
Others
Total
1
6
1
108
22
9,633
9,771
19,794,583,473
5,420,562,840
3,317,372,350
2,447,878,253
248,386,274
1,422,383,275
32,651,166,465
60.62
16.60
10.16
7.50
0.76
4.36
100.00
Identification of the controllers
The twelve largest shareholders of the company
In accordance with the definition in Title XV of Law 18,045,
Enersis was owned by 9,771 shareholders at December 31,
the controller of the company, Endesa S.A, Spain, holds 60.62%
2004. The twelve largest were:
of the share capital of Enersis through its control of Endesa
Internacional S. A.
NA M E
TAX NO.
NUM BER O F SHA RE S
Endesa Internacional S.A.
Citibank N.A. (ADRs & Chap.XIV)
AFP Provida S.A.
AFP Habitat S.A.
AFP Cuprum S.A.
AFP Santa María S.A .
AFP Summa Bansander S.A.
Banchile Corredores de Bolsa S.A.
AFP Planvital S.A.
Santander Investment S.A. Corredores de Bolsa
BCI Corredor de Bolsa S.A.
Larraín Vial S.A. Corredores de Bolsa
Sub total 12 Shareholders
Other 9,759 Shareholders
Total 8,771 Shareholders
59,072,610-9
97,008,000-7
98,000,400-7
98,000,100-8
98,001,000-7
98,000,000-1
98,000,600-K
96,571,220-8
98,001,200-K
96,683,200-2
96,519,800-8
80,537,000-9
19,794,583,473
3,779,499,374
1,909,012,845
1,118,467,473
836,459,721
687,024,387
678,932,396
475,856,976
190,666,018
163,755,393
137,579,171
102,285,086
29,874,122,313
2,777,044,152
32,651,166,465
%
60.62%
11.58%
5.85%
3.43%
2.56%
2.10%
2.08%
1.46%
0.58%
0.50%
0.42%
0.31%
91.49%
8.51%
100.00%
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
19
More important changes in shareholdings
The more important changes in Enersis shareholding during 2004 were:
NA M E
Citibank N.A. (ADRs & Chap.XIV)
AFP Provida S.A.
AFP Habitat S.A .
AFP Cuprum S.A.
AFP Summa Bansander S.A .
Banchile Corredores de Bolsa S.A.
AFP Planvital S.A.
Santander Investment S.A. Corredores de Bolsa
BCI Corredor de Bolsa S.A.
Larraín Vial S.A. Corredores de Bolsa
TAX NO
97,008,000-7
98,000,400-7
98,000,100-8
98,001,000-7
98,000,600-K
96,571,220-8
98,001,200-K
96,683,200-2
96,519,800-8
80,537,000-9
Cía de Seguros de Vida Consorcio Nacional de Seguros
99,012,000-5
Fondo Mutuo Banchile Acciones
Bolsa Electrónica de Chile de Valparaíso
The Chile Fund Inc.
Fondo Mutuo Santander
Genesis Chile Fund Limited
96,767,630-6
96,551,730-8
59,028,400-9
96,667,040-1
59,028,210-3
SHARE S A T
31 /1 2/20 03
3,131,712,672
2,054,685,902
679,461,335
912,855,104
729,762,948
673,750,034
129,016,633
138,085,786
150,826,312
138,605,309
213,109,789
54,821,604
178,161,247
97,800,180
55,015,178
0
SHARE S A T
31 /1 2/20 04
3,779,499,374
1,909,012,845
1,118,467,473
836,459,721
678,932,396
475,856,976
190,666,018
163,755,393
137,579,171
102,285,086
87,289,207
78,423,284
76,557,076
76,375,294
76,312,404
76,000,000
% CHANGE
20.7%
(7.1%)
64.6%
(8.4%)
(7.0%)
(29.4%)
47.8%
18.6%
(8.8%)
(26.2%)
(59.0%)
43.1%
(57.0%)
(21.9%)
38.7%
ND
Share transactions
There were no purchases nor sales of shares in the company
during 2004 made by the company’s chairman, directors, chief
executive officer, senior executives and inspectors of accounts.
Neither were there any purchases or sales of company shares by the
majority shareholders.
O W N E R S H I P A N D C O N T R O L
20
SANTIAG O STO CK E XCHAN GE, CH ILE AN ELEC TRO N IC STO CK E XCHAN GE AN D VALPAR AISO
STO CK E XCHAN GE
Transactions on the stock exchanges where Enersis shares
Quarterly stock market information for the last three years
are traded in Chile, through the Santiago Stock Exchange, Chilean
Electronic Stock Exchange and Valparaiso Stock Exchange, and in
During 2004, 6,931 million shares were traded on the Santiago
the United States of America and Spain, through the New York Stock
Stock Exchange, equivalent to Ch$568,408 million. The closing share
Exchange (NYSE) and the Latin American Stock Market on the Madrid
price at December was Ch$93.66.
Stock Exchange (Latibex) respectively, are detailed as follows:
SANTIAGO ST OCK E XCHA N GE
1st Quarter 2002
2nd Quarter 2002
3rd Quarter 2002
4th Quarter 2002
1st Quarter 2003
2nd Quarter 2003
3rd Quarter 2003
4th Quarter 2003
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
4th Quarter 2004
UNITS
512,037,133
474,079,058
692,521,240
684,639,252
435,639,838
2,037,701,115
2,615,141,119
2,949,415,326
1,413,791,567
1,032,271,059
2,236,312,231
2,248,285,905
AM OUNT ( CH$)
72,041,084,807
48,911,115,424
54,285,443,986
44,147,517,186
26,289,331,211
126,168,454,878
183,158,237,990
241,758,079,458
114,464,836,990
70,883,441,314
180,354,445,209
202,705,192,331
AVE RAG E PRICE
140.70
103.17
78.39
64.48
60.35
61.92
70.04
81.97
80.96
68.67
80.65
90.16
During the year, 2,083 million shares were traded on the Chilean Electronic Stock Exchange, equivalent to Ch$173,813 million. The
closing share price at December was Ch$94.50.
CHIL EAN ELECT RO NIC EX CH ANG E
1st Quarter 2002
2nd Quarter 2002
3rd Quarter 2002
4th Quarter 2002
1st Quarter 2003
2nd Quarter 2003
3rd Quarter 2003
4th Quarter 2003
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
4th Quarter 2004
UNITS
269,920,400
190,914,137
175,890,647
209,062,958
129,900,766
701,457,496
798,685,064
1,073,262,130
534,792,384
219,310,562
565,021,305
763,885,464
AM OUNT ( CH$)
37,714,503,611
19,585,092,537
13,502,731,692
13,168,996,825
7,816,872,780
44,548,746,027
56,421,436,525
87,227,786,087
43,742,052,276
16,749,908,612
44,917,950,788
68,403,030,387
AVE RAG E PRICE
139.72
102.59
76.77
62.99
60.18
63.51
70.64
81.27
81.79
76.38
79.50
89.55
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
21
During the year, 58 million shares were traded on the Valparaiso Stock Exchange, equivalent to Ch$4,985 million. The closing share
price at December was Ch$95.41.
VALPARAI SO STO CK E XCH A NGE
1st Quarter 2002
2nd Quarter 2002
3rd Quarter 2002
4th Quarter 2002
1st Quarter 2003
2nd Quarter 2003
3rd Quarter 2003
4th Quarter 2003
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
4th Quarter 2004
UNITS
18,797,002
7,970,306
22,259,663
9,087,665
9,976,687
16,722,391
20,788,077
22,763,455
17,400,165
15,688,115
12,719,018
12,601,377
AM OUNT ( CH$)
2,597,626,847
AVE RAG E PRICE
138.19
748,664,861
1,751,836,764
570,105,970
588,061,758
1,076,487,907
1,486,507,277
1,864,617,521
1,414,623,582
1,200,734,218
1,209,656,286
1,160,034,348
93.93
78.70
62.73
58.94
64.37
71.51
81.91
81.30
76.54
95.11
92.06
N E W YO RK STO CK E XCHAN GE ( NYSE)
Enersis shares began to be traded on the New York Stock
During 2004, 120 million ADRs were traded in the United
Exchange (NYSE) on October 20, 1993. The ADR of Enersis consists
States of America, equivalent to US$809 million. The closing ADR
of 50 shares in the company and its ticker code in ENI. Citibank N.A.
price was US$8.51.
acts as the depositary bank and Banco de Chile as the custodian in
Chile.
NEW Y ORK S TO CK EX CHA NGE
1st Quarter 2002
2nd Quarter 2002
3rd Quarter 2002
4th Quarter 2002
1st Quarter 2003
2nd Quarter 2003
3rd Quarter 2003
4th Quarter 2003
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
4th Quarter 2004
AD R S
10,004,100
4,378,200
3,304,200
4,063,400
2,396,400
22,642,100
28,205,200
43,052,600
36,556,900
26,246,600
26,505,200
30,515,600
AM OUNT ( CH$)
AVE RAG E PRICE
103,381,378
35,266,409
17,965,659
17,549,621
9,594,354
103,382,511
144,246,700
285,393,515
251,401,801
159,600,325
166,479,161
231,918,560
10.33
8.06
5.44
4.32
4.00
4.57
5.11
6.63
6.88
6.08
6.28
7.60
O W N E R S H I P A N D C O N T R O L
22
L ATI N A MERIC AN STO CK M ARKE T O F THE M AD RI D STO CK E XCHAN GE ( L ATI BE X)
The shares of Enersis began to be traded on the Latin American
During 2004, 3 million blocks were traded on Latibex,
Stock Market of the Madrid Stock Exchange (Latibex) on December
equivalent to €14 million. The closing price was €6.22.
17, 2001. The trading unit (block) for the company is 50 shares and
its ticker code is XENI.
Santander Central Hispano Bolsa S.A. S.V.B. acts as the link
entity and Banco Santander as the custodian in Chile.
LAT IB EX
1st Quarter 2002
2nd Quarter 2002
3rd Quarter 2002
4th Quarter 2002
1st Quarter 2003
2nd Quarter 2003
3rd Quarter 2003
4th Quarter 2003
1st Quarter 2004
2nd Quarter 2004
3rd Quarter 2004
4th Quarter 2004
BLO CKS
AM OUNT ( CH$)
AVE RAG E PRICE
547,410
735,956
1,168,892
1,332,800
1,674,520
1,590,018
289,159,472
36,196,071
599,507
665,930
713,812
589,448
6,513,823
6,439,734
6,518,111
6,028,207
6,217,505
6,210,510
1,246,411,078
207,310,744
3,288,305
3,377,061
3,688,468
3,455,069
11.90
8.75
5.58
4.52
3.71
3.91
4.31
5.73
5.49
5.07
5.17
5.86
D IVI D EN D P O LIC Y FO R 20 05
The board unanimously agreed to propose the following
Compliance with this program, in terms of dividend, will be
dividend policy for 2005 to the ordinary shareholders’ meeting of
subject to the net income actually produced and to the results of
Enersis, planned for April 8, 2005,
projections periodically made by the company or the existence of
certain conditions.
To not distribute interim dividends against net income for the
year and propose to the ordinary shareholders’ meeting to be held
during the first four months of 2006 a final distribution of an amount
equivalent to 50% of the net income for 2005.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
23
The following shows the dividends per share paid in recent years:
DIVIDEND NO
K IN D OF D I VID END
DA TE OF CL OSING
D ATE P AID
CHILEA N P ESO S
P ER SHAR E
YEAR CHARGED TO
67
68
69
70
71
Interim
Final
Interim
Final
Final
02.20.98
05.07.98
11.20.98
05.11.99
04.19.01
02.26.98
05.13.98
11.26.98
05.17.99
04.25.01
0.800000
4.500000
1.600000
4.000000
1.806391
1997
1997
1998
1998
2000
D ISTRI BUTABLE E ARN I N GS
M ATERIAL I N FO R M ATI O N
The following shows the distributable earnings for the year:
The material information reported during the year 2004 is set
out in the accompanying financial statements.
Net income for the year
Amortization of negative goodwill
Net income
TH CH$
44,307,596
(17,106,902)
27,200,694
Material information arising from previous years and which
has influenced the company’s business included that of the financial
and economic strengthening, capital increase and the signing of
syndicated loans.
SUM M ARY O F SHAREH O LD ERS’ COM MENTS
AN D PRO P OSALS
No comments were received by Enersis with respect to the
business between January 1 and December 31, 2004 from the majority
shareholders or groups of shareholders representing 10% or more of
the issued shares with voting rights, in accordance with provisions
of clause 74 of Law 18,046 and clauses 82 and 83 of the regulations
of the Corporations Law.
O W N E R S H I P A N D C O N T R O L
24
B O A R D O F D I R E C T O R S
Enersis is managed by a Board of Directors of seven members
who remain in their positions for a period of three years and may
be re-elected.
The current board was elected at the ordinary shareholders’
meeting held on March 31, 2003.
CHAIRMAN
Pablo Yrarrázaval
Tax No:5.710.967-K
Chairman of the Santiago Stock Exchange
VICE CHAIRMAN:
Rafael Miranda
Tax No: 48.070.966-7
Industrial Engineer
Instituto Católico de Artes e Industrias
(ICAI) de Madrid
DIRECTOR:
Alfonso Arias
Tax No: 48.087.945-7
Degree in Law & Economic & Business
Sciences
Universidad Complutense de Madrid
DIRECTOR:
José Luis Palomo
Tax No: 48.085.073-4
Degree in Economic & Business Sciences, Law &
Sociology
Universidad de Madrid
DIRECTOR:
Ernesto Silva
Tax No: 5.126.588-2
Commercial Engineer
Pontificia Universidad Católica de Chile
DIRECTOR:
Hernán Somerville
Tax No: 4.132.185-7
Lawyer
Universidad de Chile
DIRECTOR:
Eugenio Tironi
RUT: 5.715.860-3
Sociologist
School of Senior Studies in Social Sciences, Paris,
France
SECRETARY:
Domingo Valdés
RUT: 6.973.465-0
Lawyer
Universidad de Chile
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
25
D IREC TO RS’ REMU N ER ATI O N
As required by clause 33 of the Corporations Law 18,046, the
The amounts paid to Enersis directors as such, to members of
ordinary shareholders’ meeting held on March 26, 2004 agreed the
the committee and to those that performed as directors of subsidiaries
remuneration of the board of Enersis for the year 2004.
during 2004 are as follows:
DIRECTOR
Pablo Yrarrázaval Valdés
Rafael Miranda Robredo
José Luis Palomo Álvarez
Alfonso Arias Cañete
Ernesto Silva Bafalluy
Hernán Somerville Senn
Eugenio Tironi Barrios
TOTAL
BOARD OF ENERSIS
44,576
28,771
22,288
22,288
22,288
22,288
22,288
184,788
THOUSANDS OF PESOS AT DECEMBER 31, 2004
ENERSIS COMMITTEE
7,437
-
-
-
7,437
7,437
-
22,310
TOTAL
52,013
28,771
22,288
22,288
29,725
29,725
22,288
207,098
BOARD E XPENSES
shareholders’ meeting. The current board of directors was elected
in March 2003 and their terms expire in March 2006. The members
The board made no use of the operating expense budget in
of the board of directors do not have service contracts with Enersis
2004 that was approved by the ordinary shareholders’ meeting held
or any of its subsidiaries that provide benefits upon termination of
in March 2004.
employment.
BOARD PR AC TICES
Chilean corporate law provides that a company’s board of
directors is responsible for the management, administration and
The current board of directors was elected at the Shareholders’
representation of a company in all matters concerning its corporate
meeting dated March 31, 2003 for a period of three years. (For
purpose, subject to the provisions of the company’s estatutos and the
the period during which that person has served, please see “— A.
stockholders’ resolutions. In addition to the estatutos, the Board of
Directors and Senior Management” above). Directors have no service
Directors of Enersis has adopted regulations and policies that guide
contracts with Enersis.
Corporate Governance
our corporate governance principles. The most important of these
regulations and policies are the following:
The Internal Regulations on Conduct in Securities Markets,
Enersis is managed by its executive officers under the direction
approved by the Board on January 31, 2002, which determine the
of its board of directors which, in accordance with the estatutos, or
rules of conduct that must be followed by members of the Board of
articles of incorporation and bylaws, of Enersis, consists of seven
Directors, senior management and other managers and employees
directors who are elected at an annual regular shareholders’ meeting.
who, due to the nature of their job responsibilities, may have access
Each director serves for a three year term and the term of each of the
to sensitive or confidential information, with a view to contributing
seven directors expires on the same day. Staggered terms are not
to transparency and to the protection of investors. These regulations
permitted under Chilean law. If a vacancy occurs on the board during
are based on the principles of impartiality, good faith, placing the
the three year term, the board of directors may appoint a temporary
company’s interests before one’s own, and care and diligence in using
director to fill the vacancy. In addition, the vacancy will trigger an
information when acting in the securities markets.
election for every seat on the board of directors at the next general
B O A R D O F D I R E C T O R S
26
The Charter Governing Executives (“Estatuto del Directivo”),
by two directors appointed by the controlling shareholder. Our Comité
approved by the Board on May 28, 2003, and the Employees Code
de Directores does not currently meet the independence requirements
of Conduct, which develop our principles and values, establish the
to which the Audit Committee of Enersis, will become subject on July
rules governing dealings with customers and suppliers, and establish
31, 2005, or the additional independence requirements to which the
the principles that should be followed by employees in their work,
audit committees of U.S. companies are subject.
including ethical conduct, professionalism and confidentiality.
They also impose limitations on the activities our senior executives
Under the NYSE corporate governance rules, the audit
and other employees may undertake outside the scope of their
committee of a U.S. company must perform the functions detailed
employment with us, such as non-compete limitations.
in the NYSE Listed Company Manual Rules 303A.06 and 303A.07. Non-
U.S. companies are required to comply with Rule 303A.06 beginning
The above regulations and rules reflect our core principles of
July 31, 2005, but are not at any time required to comply with Rule
transparency, respect for stockholders’ rights, and the duty of care
303A.07. We do not currently comply with these rules, but we expect
and loyalty of the directors imposed by Chilean law.
that when we become subject to Rule 303A.06, we will comply with
both the independence and the function requirements of the rule.
Compliance with NYSE Listing Standards on Corporate
Governance
Following is a summary of the significant differences between
our corporate governance practices and those applicable to domestic
Corporate Governance Guidelines
The NYSE’s corporate governance rules require U.S. listed
companies to adopt and disclose corporate governance guidelines.
Chilean law does not contemplate this practice, other than with
issuers under the corporate governance rules of the New York Stock
respect to the codes of conduct described above.
Exchange. Because we are a “controlled company” under NYSE rules
(a company of which more than 50% of the voting power is held by
Committees and Other Advisory Bodies
an individual, a group or another company), we would not, were we
to be a U.S. company, be subject to the requirement that we have a
The Comité de Directores
majority of independent directors, or nomination and compensation
The Comité de Directores is composed of three members who
committees,
are simultaneously directors of the Company. It performs the following
functions:
Independence and functions of the Audit Committee
•
examination of Annual Report, Financial Statements and
Under the NYSE corporate governance rules, all members
the Reports of the External Auditors and Inspectors of the
of the Audit Committee must be independent. We will be subject
Accounts;
to this requirement effective July 31, 2005. As required by Chilean
•
formulation of the proposal to the Board of Directors for the
Law, Enersis has a Comité de Directores composed of three directors.
selection of external auditors and private rating agencies;
Although Chilean Law requires that a majority of the Comité de
•
examination of information related to operations by the
Directores (two out of three members) must be composed of directors
Company with related parties and/or related to operations
who were not nominated by the controlling shareholder and did not
in which the Company board members or relevant executive
seek votes from the controlling shareholder (a “non-control director”),
officers may have personal interest;
it permits the Comité de Directores to be composed of a majority or
•
examination of the remuneration framework and compensation
even a unanimity of control directors, if there are not sufficient non-
plans for managers and executive officers; and
control directors on the board to serve on the committee. Currently,
•
any other function mandated to the committee by the estatutos,
our Comité de Directores is composed by one non-control director and
the board of directors or the shareholders of the company.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
D I R E C T O R S ’ C O M M I T T E E
27
In accordance with clause 50 bis of Law 19,705, Enersis has
AC TIVITIES O F THE D IREC TO RS’ COM M IT TEE
a Directors’ Committee comprising three members who have the
D U RI N G 20 04
powers and duties contemplated in that clause.
On April 1, 2003, the board of the company appointed Pablo
the Committee examined the unconsolidated and consolidated
Yrarrázaval (related to the controller), Hernán Somerville (related
financial statements of the company at December 31, 2003 with
to the controller) and Ernesto Silva (un-related to the controller) as
their notes, statements of income and material information, together
members of the Directors’ Committee. The Directors’ Committee
with the respective reports of the external auditors and inspectors
At the first meeting of the year, held on January 28, 2004,
in turn, at its meeting held on May 15, 2003, unanimously agreed
of accounts.
to appoint Pablo Yrarrázaval as chairman and Domingo Valdés as
secretary. The Directors’ Committee at December 31, 2004 was
The Directors’ Committee approved the text of the report that
therefore conformed by:
Chairman:
Pablo Yrarrázaval
Tax No: 5.710.967-K
had to be presented to the company’s ordinary shareholders’ meeting
concerning the activities of the Committee during 2003 and the
expenses incurred by it, including its advisers, during that year.
The Directors’ Committee also proposed to the board the
Chairman of the Santiago Stock Exchange
appointment of the independent external auditing firm Deloitte &
Members:
Ernesto Silva
Tax No: 5.126.588-2
Commercial Engineer
Pontificia Universidad Católica de Chile
Hernán Somerville
Tax No: 4.132.185-7
Lawyer
Universidad de Chile
Committee Secretary:
Domingo Valdés
Tax No: 6.973.465-0
Lawyer
Universidad de Chile
Touche for the year 2004 and the appointment of the firms Feller Rate
Clasificadora de Riesgo Limitada, Fitch Chile Clasificadora de Riesgo
Limitada and Clasificadora de Riesgo Humphreys Ltda. as the private
domestic credit-rating agencies, and the firms Fitch ratings, Moody’s
Investor Services and Standard & Poor’s International Ratings Services
as the international credit-rating agencies, of Enersis for 2004.
At its meeting on February 27, 2004, the Directors’ Committee
analyzed in detail the statement of structured financial debt and
trading current accounts of Enersis, as debtor or creditor, with Enersis
group related companies at January 31, 2004.
At its meeting on May 26, 2004, the Directors’ Committee,
following an exhaustive analysis, agreed to propose to the Enersis
board the signing of a purchase contract for the shares of the
closely-held corporation Elesur S.A. that Endesa (Spain) and Endesa
Internacional S.A. (direct and indirect parent companies of Enersis)
hold . This purchase was completed, and implied that Elesur S.A.
became a consolidated subsidiary of Enersis, which is the holder of
99.9989% of its share capital. In arriving at these conclusions, the
Committee made a rigorous examination of its shareholders’ equity,
N O M B R E D E L C A P I T U L O
N O M B R E D E L C A P I T U L O
28
financial statements and the general situation of Elesur S.A. in order
making reports on the matters. The Committee examined quarterly
to determine the implications and scope of the operation and decide
the company’s unconsolidated and consolidated financial statements
whether the purchase was convenient to the corporate interests
and the remunerations systems and compensation plans for the
of Enersis and met conditions of equity similar to those normally
company’s principal managers and executives.
prevailing in the markets. The Committee resolved to prepare a
specific report on this transaction which was read and commented
In conclusion, the Enersis Directors’ Committee has fully
on at the following board meeting of Enersis.
considered the matters set out in clause 50 bis of Law 18,046 during
2004 and has analyzed and contributed to the better development
At its meeting on June 21, 2004, the Committee analyzed the
of these operations.
state of progress of the registration of the F4 documents (relating
to the registration of a Yankee bond issue with the United States
E XPENSES O F THE D IREC TO RS’ COM M IT TEE
Securities and Exchange Commission (SEC) for US$ 350 million) and
D U RI N G 20 04
Form 20-F (relating to the annual report in SEC format for the year
2003 and later up-dates).
The Directors’ Committee made no use of the operating
expenses approved by the ordinary shareholders’ meeting held
The Directors’ Committee met 12 times during 2004 at which
on March 26, 2004. The Committee had no need to contract any
it examined and approved information relating to the operations
professional advisers in carrying out its functions.
referred to in clauses 44 and 89 of the Corporations Law 18,046 and
O R G A N I Z A T I O N A L S T R U C T U R E
CHAIRMAN
Pablo Yrarrázaval
CHIEF EXECUTIVE OFFICER
Mario Valcarce
COMMUNICATIONS OFFICER
José Luis Domínguez
HUMAN RESOURCES
OFFICER
Francisco Silva
AUDITING OFFICER
Francisco Herrera
GENERAL COUNSEL
Domingo Valdés
REGIONAL CHIEF ACCOUNTING OFFICER
REGIONAL CHIEF FINANCIAL OFFICER
Fernando Isac
Alfredo Ergas
REGIONAL CHIEF PLANNING
AND CONTROL OFFICER
Macarena Lama
D I R E C T O R S ’ C O M M I T T E E
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Fernando Isac, Francisco Herrera, Domingo Valdés, Macarena Lama, Mario Valcarce, José Luis Domínguez, Alfredo Ergas and Francisco Silva.
SEN I O R E XECU T IVES
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Tax No: 5,850,972-8
Commercial Engineer
Universidad Católica de Valparaíso
CHIEF REGIONAL FINANCE OFFICER
Alfredo Ergas
Tax No: 9,574,296-3
Commercial Engineer
Universidad de Chile
CHIEF REGIONAL PLANNING AND CONTROL OFFICER
Macarena Lama
Tax No: 21,495,901-1
Agronomist
Escuela Técnica de Ingenieros Agrónomos de Madrid
CHIEF REGIONAL ACCOUNTING OFFICER
Fernando Isac
Tax No: 14,733,649-7
Economist
Universidad de Zaragoza
LEGAL COUNSEL
Domingo Valdés
Tax No: 6,973,465-0
Lawyer
Universidad de Chile
CHIEF COMMUNICATIONS OFFICER
José Luis Domínguez
Tax No: 6,372,293-6
Civil Engineer
Pontificia Universidad Católica de Chile
CHIEF AUDIT OFFICER
Francisco Herrera
Tax No: 7,035,775-5
Civil Engineer
Pontificia Universidad Católica de Chile
CHIEF HUMAN RESOURCES AND
ADMINSTRATION OFFICER
Francisco Silva
Tax No: 7,006,337-9
Public Administrator
Universidad de Chile
E N E R S I S M A N A G E M E N T T E A M
30
REMU N ER ATI O N O F SEN I O R E XECUTIVES
M A N AG E M EN T O F SU BSI D I A RY CO M PA N I ES
AN D M ANAGERS
The total remuneration received by the senior executives and
managers of Enersis amounted to ThCh$2,139 million at December
31, 2004.
I NCENTIVE PL ANS
Enersis has an annual bonus plan for its executives for
compliance with objectives and the level of individual contribution
to the company’s results. This plan includes a definition of a range
of bonuses according to the hierarchical level of the executive. The
bonuses eventually paid consist of a certain number of gross monthly
salaries.
SE VER ANCE PAYMENTS M AD E
Severance payments made during 2004 amounted to Ch$ 50
million which were paid to managers leaving the company during
the year.
CHIEF EXECUTIVE OFFICER OF ENDESA CHILE:
Héctor López
Tax No: 48,062,402-5
Degree in Law and Economic Sciences
ICADE de Madrid
CHIEF EXECUTIVE OFFICER OF CHILECTRA:
Rafael López
Tax No: 14,709,119-2
Degree in Economic Sciences
Universidad de Málaga
CHIEF EXECUTIVE OFFICER OF EDESUR:
José M, Hidalgo
Tax No: 10,120,778-G
Degree in Economic and Business Sciences
Universidad de Santiago Compostela
CHIEF EXECUTIVE OFFICER OF EDELNOR:
Ignacio Blanco
Tax No: 14,677,073-8
Degree in Economic and Business Sciences
Universidad de Zaragoza
CHIEF EXECUTIVE OFFICER OF CERJ (AMPLA):
Marcelo Llévenes
Tax No: 9,085,706-1
Commercial Engineer
Universidad de Chile
CHIEF EXECUTIVE OFFICER OF COELCE:
Cristián Fierro
Tax No: 9,921,311-6
Civil Engineer
Universidad de Chile
CHIEF EXECUTIVE OFFICER OF CODENSA:
José Inostroza
Tax No: 6,917,769-7
Civil Engineer
Universidad de Chile
CHIEF EXECUTIVE OFFICER OF SYNAPSIS SOLUCIONES
Y SERVICIOS IT LTDA,:
Claudio Guzmán
Tax No: 6,966,452-0
Information Technology Engineer
Universidad de Chile
CHIEF EXECUTIVE OFFICER OF COMPAÑIA AMERICANA
DE MULTISERVICIOS LTDA, (CAM):
Pantaleón Calvo
Tax No: 6,611,573-9
Civil Engineer
Universidad de Chile
CHIEF EXECUTIVE OFFICER OF INMOBILIARIA MANSO DE
VELASCO LTDA,:
Andrés Salas
Tax No: 6,002,870-2
Civil Engineer
Universidad de Chile
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D ISTRI BUTI O N O F H UM AN RESO U RCES
The personnel of Enersis are distributed as follows, including information on consolidated subsidiaries, at December 31, 2004:
COMPANY
SE NIO R MA NA GE RS &
E XE CU TIV E S
Enersis
Endesa Chile (1)
Chilectra (2)
Edesur
Edelnor
Cerj (Ampla)
Codensa
Coelce
Synapsis (3)
CAM (4)
Inmobiliaria Manso de Velasco
Total
15
55
13
32
14
25
18
23
13
10
4
222
P ROF ESSIONA LS &
TECHN ICIANS
106
1,369
479
1,624
336
1,010
795
545
629
1,157
11
8,061
EM PL OYEES & OTHE RS
TOTAL
91
138
200
621
193
373
88
769
119
329
14
2,935
212
1,562
692
2,277
543
1,408
901
1,337
761
1,496
29
11,218
(1)
Includes: Endesa Chile, Ingendesa, Pangue, Pehuenche, Celta, San Isidro, Central Costanera, El Chocón, Edegel, Emgesa, Betania, Cachoeira Dourada and Túnel el Melón.
(2)
Includes: Empresa Eléctrica de Colina and Luz Andes.
(3)
Includes: Synapsis Chile, Synapsis Argentina, Synapsis Colombia, Synapsis Brasil and Synapsis Perú.
(4)
Includes: CAM Chile, CAM Argentina, Cam Brasil, CAM Colombia and CAM Perú.
Enersis provided numerous activities in 2004 for the continuous
The working climate survey was made in October in all
improvement in the quality of service offered by the company to
companies of the Endesa (Spain) Group and the global results were
its subsidiaries. Human Resources management also set itself
published in late December. In the case of Latin America, the general
the objective of consolidating an increase in satisfaction in the
satisfaction indicator rose by 11 percentage points compared to the
organization’s working climate.
previous survey made in 2002. In the specific case of Enersis, the
degree of satisfaction increased by 26%.
Both definitions lead to the carrying out of a Management of
Change Program based on the need to generate a positive attitude
Another important landmark in the Group’s human capital
of belonging and quality of service in everyone working for Enersis,
performance was the development and implementation of a
annually organizing workshops focused on identifying and resolving
management system based on the SAP platform, which allows
internal problems in every area of the organization.
the integrated and effective management of human resources
development processes and the unification and control of the
Other activities carried out during the year and which
processes for providing a global view.
contributed to the compliance of the management’s objectives were
the different training programs directed to workers and their families
With respect to General Services, specifically in infrastructure,
such as supervision, the development of technical and personal skills,
we continued with the expansion, renovation and modernization of
and induction programs. In all, these totaled 16,000 hours of training
some of the installations in Endesa’s corporate building in Santiago,
distributed as follows: 7% for managers, 43% for professionals and
Chile, in order to centralize the Group’s strategic and tactical functions
50% for staff.
in one place. Chilean subsidiaries were also given support in matters
concerning transport, logistics and safety management.
E N E R S I S M A N A G E M E N T T E A M
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C U L T U R A L A C T I V I T I E S
The contribution made by Enersis in Chile in terms of social
D O NATI O N O F LI BR ARIES TO REMOTE
responsibility is more than outstanding when taking into account
COM MU N ITIES
all the projects and contributions in different areas that this new
business vision involves.
This reinforcement campaign made by Enersis and El Mercurio
newspaper began four years ago. To this date, around four thousand
It requires the participation in initiatives that contribute
books have been handed to public libraries in Chile, in areas where
to the growth and improvement of the standard of living of local
the population has difficult access to culture. In addition to having
inhabitants. These have mainly been focused on cultural, social
collaborated with the communities of Putre (1st Region), Tirúa (Eighth
support and educational matters.
Region) and Puerto Natales (Twelfth Region), Enersis supported
education and social reintegration in Santiago’s Feminine Penitentiary
The following are the most notable of Enersis’s initiatives in
Center where 1,800 prisoners are held.
social responsibility:
ILLUM I NATI N G THE CH U RCHES I N TH E SO UTH
O F TH E WO RLD
EN ERGY I N FO R M ATI O N CENTER
The Enersis Group has maintained the Energy Information
Center for four years. This provides free entry to children from schools
Since October 2001, Enersis with the Fundación Endesa and
in the Metropolitan Region for them to become better aware of
the Chilean Group companies (Endesa Chile and Chilectra), jointly
energy–related concepts.
with the Chilean Episcopal Conference, inaugurated a complete
ornamental illumination systems for 25 temples belonging to the
The center, which in 2004 received approximately 10,000
country’s historical heritage.
school children, has games, interactive maps and a video explaining
electricity generation and distribution activities. The company also
In 2004, the benefited included the Parish Church of the
complements this educational program in Santiago with work of
Metropolitan Cathedral, the parishes of Putre and Parinacota, the
a team of professionals created to provide talks on electricity to
Padre Hurtado Sanctuary, Santo Domingo church in Santiago and
students living in the areas close to the country’s power stations.
the cathedrals of Osorno and Puerto Montt.
The president of Fundación Endesa, Rodolfo Martín Villa,
together with the chairmen of the three Enersis group companies
in Chile, Pablo Yrarrázaval, Luis Rivera and Jorge Rosenblut, signed
a new agreement with the Chilean Episcopal Conference extending
the term of the agreement to the end of 2006 in order to complete
pending projects and also attend new requests that may arise, whose
maximum period for execution is three years.
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Parinacota Church.
Antofagasta Cathedral.
Puerto Montt Cathedral.
CHRISTM AS E VENT FO R CH ILD REN AT SO CIAL
The conferences were notable for the quality of their speakers,
RISK
for having promoted a debate on the political, social and economic
scenarios and for having shown different points of view on Chile’s
Fifty-five thousand children in social risk belonging to 181
regional development prospects.
charitable institutions in the Metropolitan Region enjoyed a large-
scale spectacle offered by the First Lady , Luisa Durán, in the National
ESTR ATEG IA N E WSPAPER SEM I NARS
Stadium, in which two thousand artists presented the “Deep Blue”
story on stage. This event was sponsored by the company.
Enersis sponsored weekly seminars organized by the Estrategia
newspaper, a specialized journal that developed a plan of 48 business
SP O NSO RSH IP O F REG I O NAL D E VELO PMENT
seminars in which Enersis group employees actively participated.
CO N FEREN CES
Enersis, together with El Diario Financiero, covered Chile during
as strategic planning, marketing, safety and risk prevention. The
the period June to December with a “Cycle of regional development
sessions, which are also open to the general public, last for two days
conferences”, a program carried out for the sixth consecutive year.
and are held in the Estrategia building.
This training is given by recognized specialists in matters such
In 2004, the habitants of Iquique, Calama, Antofagasta, Viña del
Mar, Concepción, Temuco, Puerto Varas and Santiago were invited
free of charge.
C U L T U R A L A C T I V I T I E S
34
F I N A N C I A L A C T I V I T I E S
CH ILE AN FI NANCES
These operations carried out during 2004 have not only
reduced the debt but also produced a substantial reduction in
Liabilities were refinanced in 2004 through new syndicated
borrowing interest rates and thus the financing expenses of the
loans, the prepayment of bank debt and other minor operations,
Enersis Group.
including the prepayment of bank debt with funds generated by the
companies’ operations.
I NTERNATI O NAL FI NANCES
In February, Endesa Chile signed a syndicated loan agreement
It was established as an objective in early 2004 to increase
with a group of banks led by BBVA, Citigroup, Caja Madrid and
the levels of debt in local currency of each country in which the
Santander Central Hispano Investments Inc., for an amount of US$250
Group operates. This would enable subsidiaries to have financial
million, with an interest rate of Libor + 115 basis points and a term of
commitments more in line with the currency of their revenues.
3 years 6 months. The proceeds, together with own funds, were used
to prepay the previous syndicated loan of US$284 million.
Consequently, a total of approximately US$600 million was
In April, Enersis prepaid US$150 million of the Jumbo III loan
Colombia, US$145 million in Brazil, US$79 million in Peru and US$41
issued on local markets of which US$333 million were issued in
and signed an Amended and Restated Credit Agreement for US$350
million in Argentina.
million and reduced the interest rate by 110 basis points.
The highligths include the following transactions:
In November, Enersis and Endesa Chile signed different
revolving credit facilities for a total of US$600 million with a group
Argentina: Edesur issued domestic bonds for a total of 120
of banks led by BBVA, Caja Madrid, Banco Santander Central Hispano
million Argentine pesos, being the first electricity company to issue
and Citigroup. This consisted of US$ 350 million for Enersis, with a 4-
in pesos, for a term of 3 years, following the country’s economic
year bullet repayment and an interest rate of Libor + 37.5 basis points.
crisis. It was the company’s first issue in 7 years.
The Libor margin is approximately 10.7% of the margin applicable to
the Jumbo III loan of May 2003. For Endesa Chile, the facility consisted
Brazil: Coelce issued debentures for a total of 89 million reals
of US$250 million, with a 6-year bullet and an interest rate of Libor
(BRL) at an 8-year term, being the longest term in local currency
+ 37.5 basis points.
among the country’s electricity companies. Cerj (Ampla) also
managed to issue debentures for a total of BRL 294 million at 3
In June, the debts of Compañia Americana de Multiservicios,
years as the result of a successful financial strengthening plan that
Inmobiliaria Manso de Velasco and Chilectra with BancoEstado,
has reduced its cost of debt and extended its maturity.
for a total of UF2,042,111, were renewed at a rate of TAB + 0%. All
these debts were prepaid at the end of December as a result of the
company’s excellent cash position.
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Colombia: Codensa has issued local bonds for a total of
OTHER
500,000 million Colombian pesos (COP) at 5, 7 and 10-year terms.
The proceeds were used to repay short-term debts. Betania issued COP
The Enersis group during 2004 implemented the requirements
300,000 million at a 7-year term, and a second tranche is expected
for complying with the Sarbanes Oxley Act (SOA). The Finance
to be issued in 2006 for COP 100,000 million.
Department also prepared the regulations and procedures project
Peru: Edelnor placed domestic bonds for a total of 150 million
financial management. The object is to regulate and standardize
soles (PEN) at terms of 4, 5 and 10 years in various tranches. Edegel
all important processes carried out in the group’s various financial
also issued PEN 50 million at 4 years also in various tranches. These
departments, to ensure their correct functioning.
for extending the rigor of that law to all aspects of the company’s
transactions form part of their debt refinancing policies.
In addition, the Debt Control(Compliance ) and Capital Markets
The Group’s interest rate hedging policy consists of
Management strengthened the compliance responsibilities in 2004
maintaining cover for at least 70% of its most hedged fixed-rate
to the most demanding rules coming out of the international financial
debt. Throughout 2004, as a result of the reductions in floating-
markets and, in particular, the SEC. It has also put into practice a
rate debt, the company’s hedging levels have remained close to
control system of restrictions and risk measurements related to the
90%. Every time a loan is repaid, the related derivative instruments
group’s different loan agreements, thus contributing to the best
are liquidated in order to avoid keeping instruments without any
practices of international companies.
underlying purpose.
During 2004, a new exchange rate hedging policy was begun
CRED IT R ATI N G
based on cash flows. The objective is to maintain a balance between
Enersis is an investment company whose assets belong to
flows indexed to foreign currencies (US$) and the level of assets and
electricity generating, distribution and transmission businesses,
liabilities in that currency.
plus investments in other related businesses. The Group is based
in Chile and also operates in Argentina, Brazil, Colombia and Peru
As a result of a study made of the indexation of cash flows,
which provides it with an important and positive diversification and
Enersis had to contract UF/US$ swaps for US$700 million in order
a balanced corporate risk profile. Enersis’s cash flows follow a similar
to leave the level of dollar liabilities adjusted to expected flows in
diversified pattern.
that currency. In the case of Endesa Chile, it was not necessary to
redenominate its debt, according to the levels of its dollar assets
and liabilities.
The policy also establishes maximum levels of accounting
mismatch for Enersis and Endesa Chile consolidated, so occasionally
it is necessary to hedge short term. According to the actions taken
during the year, the levels of Group mismatch have been maintained
within the limits of the company’s policies.
F I N A N C I A L A C T I V I T I E S
36
The precautionary measures have been duly valued by
An exception is the Argentine situation where there is still no clear
the Chilean and international credit-rating agencies. These firms
resolution of the problems associated with the arbitrary freezing of
recognize, among other things, that one of the Group’s strengths
tariffs by the government in early 2002.
is its suitable portfolio of investments and conservative financial
structure. However, there are certain risks that cannot be controlled
However, and as a result of the structural change made
by the company and which affect its cash flows, making them less
in Enersis’s financial and capital positions throughout 2003, the
predictable and thus causing some uncertainty.
perception of the Group risk improved notably. This is confirmed
in the opinions issued in 2004 by the credit-rating agencies Fitch,
Contributing to a positive risk evaluation relating to the
Moody’s and Standard & Poor’s.
investments outside Chile is the better perception of the new
Brazilian regulatory model, the strong recovery in the economies, the
The credit ratings of Enersis, internationally and in Chile, noting
strengthening of local currencies and the recovery in energy demand.
the positive prospects in two of them, as of March 2005, are as
follows:
KIND O F D EBT
Local currency
Foreign currency
(Trend)
INSTR UM E NT
Shares
Bonds
F ITCH
BBB-
BBB-
(Positive)
F ITCH
1st Class Level 1
A+
STAN DA RD & P OOR’S
MO OD Y’ S
BBB-
BBB-
(Positive)
FE LL ER R ATE
1st Class Level 1
A+
-
Ba1
(Stable)
HUMP HRE YS
1st Class Level 2
A-
The Group’s corporate strategy for containing the risks inherent
A concrete measure in the global context of the pro-active
in an investment company in the electricity area, has been to manage
management of Group risk is the Enersis Group Risk Committee
the company’s assets prudently and responsibly, taking care to
for identifying the most varied risks that can affect the company
maintain an adequate level of liquidity. This policy has been carried
and proposing the necessary containment measures promptly. This
out last year by the strengthening of cash positions, reduction in debt,
Committee has prepared a Group risks map and is operating with the
improvements in service quality indicators, concentration on core
most modern Business Risk Administration techniques.
activities and constant monitoring of the economic and regulatory
situation in each country where we operate.
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H ISTO RIC E XPANSI O N
Compañía Americana de Multiservicios Ltda. (CAM)
Enersis is one of the largest private-sector electricity groups
Its business is related to commercial and other operations in
in Latin America in terms of consolidates assets and sales. This has
networks for public utility companies, preferably in meter system
been achieved through stable and balanced growth in its electricity
services for utilities and as a purchasing agent, importer and exporter,
generation and distribution businesses and their related activities.
and also the seller and provider of materials for Enersis subsidiaries
The distribution business is carried out through its subsidiary
Chilectra, a company that distributes electricity in Chile’s Metropolitan
I NTERNATI O NALIZ ATI O N
Region, and has foreign investments.
and other companies.
Its investments in generation in Chile and abroad are
in different privatizations in neighboring countries, thus developing
mainly developed through the subsidiary Empresa Nacional de
a significant presence in the electricity sectors of Argentina, Peru,
Electricidad S. A. (Endesa Chile).
Colombia and Brazil.
Enersis began its international expansion in 1992 by taking part
It also has businesses in areas that complement its activities
In July that year, Distrilec Inversora S.A., a company in which
through majority holdings in the following companies:
Enersis is a shareholder, acquiered Empresa Distribuidora Sur S. A.,
Edesur, which distributes electricity in Buenos Aires, Argentina.
Later, in December 1995, Enersis acquired an additional 39% of this
Synapsis Soluciones y Servicios IT Ltda.
company to give it control.
Supplies services and equipment related to computing and
Between July 1994 and December 1995, Enersis, through
data processing.
Inmobiliaria Manso de Velasco Ltda.
Dedicated to real estate, through the integral development
of real estate projects and the administration, rental, purchase and
sale of the real estate of Enersis and subsidiaries in Chile.
Inversiones Distrilima S.A., acquired 60% of Empresa de Distribución
Eléctrica de Lima Norte S.A., Edelnor, in Peru. It also acquired
Edechancay that same year.
During 1996, Enersis entered for the first time into the Brazilian
market, acquiring jointly with other partners, an important holding in
Companhia de Eletricidade do Río de Janeiro, Cerj, which distributed
electricity in the city of Río de Janeiro, Brazil. Today it trades under
the name of Ampla.
B U S I N E S S E S
38
In 1997, Enersis successfully took part, through a consortium,
thermal plant in the state of Ceará in Brazil. The commercial operation
in the capitalization and subsequent acquisition of control of
also started of the second phase of the electrical interconnection
Codensa S. A., Codensa, which distributes electricity in the city of
between Argentina and Brazil, completing a transmission capacity
Bogotá and in the department of Cundinamarca, Colombia.
of 2,000 MW. Enersis also strengthened the financial position of
In early 1998, Enersis returns to the Brazilian market, this time
US$100 million and a capital increase of US$100 million, and US$1.6
in a consortium that is awarded control of Companhia Energética de
million was invested in increasing its shareholding in Distrilima (the
Ceará S.A., Coelce, that distributes electricity in north-east Brazil, in
company that controls the distributor Edelnor) by 1.73%.
Cerj (Ampla) by the conversion of subordinated bonds into capital by
the state of Ceará.
During 2003, Enersis made a capital increase for strengthening
During 1999, Endesa (Spain) became the controller of Enersis.
its capital base by more than US$2,104 million. It also refinanced
Through a share purchase offering, in which it offered Ch$320 per
US$4,018 million through different instruments like new syndicated
share, the multinational acquired another 32% of Enersis which,
loans, bonds issues on the local and foreign markets, prepayment
added to the 32% that it bought in August 1997, gave it a final
of the “Jumbo II” loan and other smaller operations. Finally, assets
shareholding of 64%. The transaction, completed on April 7, 1999,
were sold for US$757 million which included the Canutillar generating
involved an investment of US$1,450 million.
plant and the Río Maipo electricity distributor.
On May 11, 1999, Enersis acquired a further 35% in Endesa
Debt refinancing for US$2,100 million was achieved in 2004,
Chile, in addition to the 25% it already held. This gave it practically
through different instruments like new syndicated loans, the issue
60% of the generating company, making it the parent company and
of bonds on the local and foreign markets, the prepayment of the
consolidating itself among the leading private-sector generating
“Jumbo III” loan and other smaller operations. In addition, the
groups in Latin America.
subsidiary Endesa Chile’s Ralco plant started its operations with a
contribution of 690 MW of capacity.
Important transactions were carried out in 2000 which can
be summarized as follows: a capital increase of the company by
RISK FAC TO RS
US$520 million, and proceeds of US$1,400 million from the sale of
the subsidiaries Transelec, Esval, Aguas Cordillera and divestments of
Enersis is a holding company that counts on payments from its
real estate, within the strategy framework of the Genesis Plan.
subsidiary and associate companies to meet its financial obligations.
An important part of the business of some of these subsidiaries
Important investments were made throughout 2001: US$364
depends on hydrological conditions so potential drought conditions
million to increase the company’s shareholding in Chilectra; US$150
could affect the company’s profits. Certain subsidiaries could also
million in the acquisition of a 10% holding in Edesur, Argentina, which
find themselves in a position of having to pay administrative fines
was held by company employees; US$132 million for increasing its
caused by droughts.
holding in the Brazilian Cerj (Ampla); and US$23 million for increasing
the shareholding of Enersis in Río Maipo by 15%.
Regulatory changes by the governments of the different
During 2002, construction continued in Chile of the Ralco
operate could signify additional operating costs and impact their
countries where the company’s subsidiary and associate companies
hydroelectric plant, located in the 8th Region, and of the Fortaleza
results.
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Enersis has debt subject to financial covenants and other
The above factors enable Enersis to make investments that
contractual restrictions. Also, exchange rate fluctuations could affect
contribute to the profit growth with a proper weighting of the risks
the company’s operating results adversely.
deriving from the businesses in which it participates.
Some Latin American economies where Enersis has investments
I NVESTMENTS AN D D IVESTMENTS
have been characterized by occasional drastic interventions by
government authorities. For example, the Argentine authorities have
Chile
implemented a series of monetary and exchange control measures
that have affected the operating results adversely and could continue
Chilectra carried out a complete investment plan in 2004
to have a negative impact.
involving US$59 million, mainly for meeting demand in its concession
area and improving the quality of its customer service.
With respect to the recent natural gas shortage in Argentina,
this could have a negative impact on our generating plants in Chile
On March 25, 2004, Chilectra, through its Agency, bought
and Argentina, especially those that use Argentine natural gas.
760,255,861,477 shares in Cerj (Ampla) from Enersis Internacional
for US$138,275,774, being the equivalent of a 17.95% shareholding
As a result of this shortage, the local price of natural gas has
in Cerj.
risen; this could lead to a fall in our operating margins if we are
incapable of passing on these higher costs to our customers.
On September 6, 2004, the Ralco hydroelectric plant became
D E VELO PMENT AN D GROW TH
available to the Load Economic Dispatch Center (CDEC-SIC) and began
to operate commercially with its first unit, followed by the second
unit on September 22. On September 27, this plant on the Upper Bío
The principal objective of Enersis is to maximize the economic
Bío was inaugurated, enabling the injection into the electricity grid
value of its equity through stable growth based on electricity
of an average annual generation of 3,150 GWh, with a capacity of
businesses that are strictly evaluated and managed. The achievement
690 MW, which signifies a contribution of 9% to the energy required
of this objective is based on an investment strategy focused on
on the Central Grid (SIC).
increasing the value of the subsidiaries and associates and on the
acquisition of new companies.
Brazil
A key factor in this strategy is making investments that
significantly need Enersis’s experience, management skills and
operating capacity. This need requires making investments in
companies in which Enersis can have influence over management and
operations, and with the power to approve or reject its investment
projects.
Another development factor consists of having an exceptional
team of professionals who actively interact with the subsidiaries,
advising them in the evaluation of their investment or financing
projects and who are permanently open to new opportunities in the
respective business areas in the Latin American market.
The extraordinary shareholders’ meeting of Cerj (Ampla) held
on January 8, 2004 unanimously approved a capital increase of
1,339,622,641,509 common shares in a proportion of R$0.53 per
thousand shares, equivalent to R$710,000,000.
On February 27, Enersis, through its Cayman Islands Agency,
subscribed for 1,335,849,056,604 common shares corresponding to
the rights of Endesa Spain, Chilectra, Electicidade de Portugal and
Enersis, which was fully capitalized. Ampla was then able to reduce
its debt by approximately US$240 million and Enersis increased its
shareholding (direct and indirect) from 71.82% to 80.72%.
B U S I N E S S E S
40
In January 2004, the Endesa Fortaleza thermal plant, in
Chilectra card which gives access to a world of benefits apart from
the state of Ceará in Brazil, entered into service, adding 319 MW
electricity.
of capacity to meet the electricity needs of north-east Brazilian
market.
In general terms, the trend foreseen for 2005 in the countries
where the Group has investments is toward an increase in electricity
PROSPEC TS FO R 20 05
demand in line with expected economic growth.
Chile
Brazil
In electricity distribution, Chilectra expects a consolidation
Cerj (Ampla) will continue with its efforts to reduce the level
of the economic growth seen in 2004 when energy sales volumes
of energy losses. It is expected that the company will connect in
increased by 7.6%. The company will also continue to develop and
2005 more than 120,000 customers with high-technology electrical
consolidate the sale of services and products related to sales of
networks (DAT) which are anti-theft and make more than 87,000
electricity.
normalizations. The DAT networks consist in replacing the existing
electricity network with one that prevents direct connection by the
Chilectra expects to consolidate its strategic plan “Chilectra
customer.
21st Century”. It will continue in 2005 with the renewal of the
corporate image projecting a message of proximity and modernity
The company also expects to consolidate its internal
to its customers. With respect to social responsibility, actions will be
transformation plan. This strategic plan, in 2005, will seek to improve
focused on the Fundación Chilectra Activa, an institution that will
the working climate, personal development, improve and consolidate
dedicate its efforts to the strengthening of education with emphasis
the corporate image, reduce the level of losses and optimize its
on matters related to electricity.
functions operationally.
Enersis expects that the authorities will continue creating
Coelce will continue with its electrification program “Light
conditions for private investment in electricity generation,
for Everyone” whose investments are to expand the distribution
transmission and distribution in order to maintain a stable national
networks for the rural sector of the company’s concession zone. This
energy matrix that guarantees electricity supplies to end customers
program falls within the energy “universalization” plan being carried
and national economic development.
out by the government and the company, to supply energy to all
The company will also remain alert to gas dependency of
theft, mainly through the metering of more than 500 transformers
Argentina as the principal input for electricity generation. The
which involve 110,000 customers, in order to detect areas of heavy
its customers. During 2005, Coelce will focus its programs on anti-
government has nevertheless said that it foresees no electricity
energy theft.
restrictions for 2005.
The distributor is trying to lead in the development of the city
plan called “Plan Escalada Coelce” which seeks to improve the
of Santiago and has proposed to all the civic authorities involved a
service and attention to its customers, improve the labor climate
plan for placing overhead wiring underground. Also, in its intent to
with its workers and staff, reductions in the level of energy losses
offer an integral service to its customers, it has created the Activa
and improvement of the corporate image.
In another area, the company will continue with its strategic
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
41
Argentina
Peru
The focus of attention will be the same as in 2004: the
According to the current electricity legislation, the new
renegotiation of tariffs and Edesur’s concession contract with the
distribution tariffs for the next 4 years are due to be set, effective
Argentine government. We remind you that the emergency law of
November 1, 2005, for the distributor Edelnor. It is hoped that the
January 2002 basically “peso-ified” and froze distribution tariffs
authority will keep to purely technical factors in this process and
on the basis of 1 peso = 1 US dollar. The law therefore has a serious
thus lead to an adequate return on the investments the company
effect on the company’s economic-financial equation which has been
has carried out and create conditions so that Edelnor can continue
dragged to a particularly critical state with respect to the provision
to provide its customers with the best service.
of the service and the accomplishment of obligations in the terms
originally agreed.
It is also expected that Edelnor will increase its sales in line
with the country’s economic growth and raise its income from other
With respect to investments, Edesur will make every effort
energy-related services.
to maintain the quality of service and respond to the growth of its
concession area, taking into account the company’s financial situation
Colombia
in view of an adverse tariff scenario that does not guarantee an
economic return.
Codensa should be able to further optimize its capital structure.
The competent authority has been asked to approve a capital
It is hoped that the government will recompense the business
reduction of COP$925,000 million which was previously approved
according to the quality of service and profitability conditions set out
in 2004 by the company’s bond-holders meeting.
in the concession contract on which the investment was based.
The Taltal, San Isidro and Gasatacama plants in Chile currently
and trading of new services and products related to energy sales.
The company is expected to intensify the commercialization
depend on natural gas for their thermal generation and are parties
to minimum volume purchase contracts with Argentine suppliers.
PRO PERTIES AN D I NSU R ANCE
On March 26, 2004, the Argentine state issued a resolution allowing
for the partial suspension of fuel exports. This resolution permits
The company owns some equipment and substations located
the country’s president to temporarily suspend the long-term supply
in Chile’s Metropolitan Region. It has insurance cover for risks such
contracts with Argentine exporters. Should there be continuous
as fire, lightning, explosions, malicious acts, earthquake, flooding,
interruptions in natural gas supplies from Aergentina, the gas
landslides, etc.
could possibly be replaced by more expensive fuels like coal and/or
diesel in order to maintain our current level of generation, and this
TR AD EM ARKS
would translate into higher generating costs and lower operating
margins.
The company has registered the trademarks Enersis, Chispazos,
Dixsa, EnersisPLC and Internet at the speed of light and Enersis
For its part, Endesa Chile has enabled its natural gas generators
PLC.
to continue to face the winter of 2005 with the equipment and
permits required for generating with diesel oil in the event of gas
supply restrictions.
B U S I N E S S E S
42
I N V E S T M E N T A N D F I N A N C I N G P O L I C Y F O R 2 0 0 4
The ordinary shareholders’ meeting held on March 26, 2004
ii)
Investments in other subsidiaries such that the sum of the
approved the Investment and Financing Policy which states:
proportions of the fixed assets corresponding to the participation
1. I NVESTMENTS
(a) Investment areas
in each of these other subsidiaries does not exceed the proportion
of the fixed assets corresponding to the participation in the
electricity sector subsidiaries and Enersis.
Enersis will invest in the following areas, as authorized in its
(c) Participation in the control of the investment areas
bylaws:
• The investment in or formation of subsidiary or associate
Enersis’s corporate purpose, the following shall be followed to all
For the control of the investment areas and as established in
companies whose business is similar, related or linked to energy
possible extent:
in any of its forms or nature or the supply of public utilities or
have energy as a principal input.
• The appointment of directors will be proposed in shareholders
meetings of the subsidiary and associate companies that belong
•
Investments consisting of the acquisition, exploitation,
to the Enersis holding, ensuing that these persons are preferably
construction, rental, administration, commercialization
directors or executives of the company or its subsidiaries.
and disposal of all kinds of real estate, directly or through
subsidiaries.
• The investment, financing and commercial policies, together with
accounting systems and criteria to be followed, will be proposed
• Other investments in any kind of financial assets, debt titles and
to the subsidiary companies.
securities.
b) Maximum investment limits
be supervised.
• The performance of the subsidiary and associate companies will
The maximum investment limits of each area of investment
• A constant control will be maintained over debt limits so that
are the following:
the investments or contributions made or planned do not imply
anything unusual in the parameters defining the maximum
i)
Investments in its electricity sector subsidiaries, that are
investment limits.
necessary for these to be able to comply with their respective
objectives.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
I N V E S T M E N T A N D F I N A N C I N G P O L I C Y F O R 2 0 0 4
43
2.FI NANCI N G
(a) Maximum indebtedness
The maximum consolidated debt level of Enersis will be a total
debt / equity plus minority interest ratio of 1.75 times.
(b) Management powers for agreeing dividend
restrictions with creditors.
Dividend restrictions may only be agreed with creditors if such
restrictions are previously approved in a shareholders’ meeting.
(c) Management powers for agreeing the granting of
security with creditors.
The company’s management may agree to the granting of
personal guarantees or tangible security, in accordance with its law
and the bylaws.
(d) Assets essential for the functioning of the company.
The shares representing the contributions made to its
subsidiary Chilectra constitute assets essential for the functioning
of the company.
I N V E S T M E N T A N D F I N A N C I N G P O L I C Y F O R 2 0 0 4
44
C O M P A R A T I V E F I N A N C I A L S T A T E M E N T S
Millions of Ch$ (nominal)
Total assets
Total liabilities
Minority interest
Shareholders’ equity
Current ratio
Debt ratio (1)
Sales
Cost of sales
Administrative and selling expenses
Operating income
Non-operating result
Net income (loss) for the year
1995
1,524,737
704,661
311,971
508,105
0.75
0.86
736,026
(561,474)
(86,030)
88,522
57,516
97,542
1996
4,136,432
2,028,207
1,465,902
642,323
1.17
0.96
1,160,667
(718,014)
(117,240)
325,413
(14,845)
105,969
(1) Total liabilities / (shareholders’ equity plus minority interest)
1997
6,180,415
3,202,042
2,272,352
706,021
1.20
1.08
1,334,977
(857,444)
(115,129)
362,404
(66,693)
103,516
2002
12,621,165
7,564,982
4,050,603
1,005,580
1998
7,442,034
4,017,266
2,640,805
783,963
1999
11,123,834
6,822,701
3,602,470
698,662
0.94
1.17
0.81
1.59
1,548,497
2,270,897
(942,288)
(1,596,916)
(129,857)
476,352
(184,815)
90,093
(244,742)
429,240
(400,246)
(78,159)
2003
2004
10,732,747
10,507,525
4,835,073
3,349,282
2,548,392
1.02
0.82
4,822,966
3,125,006
2,559,553
1.49
0.85
2000
2001
11,058,463
12,388,155
7,254,045
3,954,923
1,179,186
6,444,707
3,513,155
1,100,600
0.62
1.40
0.71
1.41
0.56
1.50
2,589,957
2,970,273
2,485,873
2,352,333
2,708,925
(1,754,707)
(1,966,322)
(1,730,050)
(1,651,732)
(1,898,088)
(314,736)
520,514
(159,532)
90,083
(271,383)
732,567
(483,496)
40,926
(223,179)
532,644
(796,530)
(223,748)
(169,503)
531,098
(449,911)
12,468
(176,635)
634,202
(368,653)
44,308
Millions of Ch$ (nominal)
Total assets
Total liabilities
Minority interest
Shareholders’ equity
Current ratio
Debt ratio (1)
Sales
Cost of sales
Administrative and selling expenses
Operating income
Non-operating result
Net income (loss) for the year
(1) Total liabilities / (shareholders’ equity plus minority interest)
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
C O R P O R A T E S T R U C T U R E
45
C O R P O R A T E S T R U C T U R E
46
E N E R S I S G R O U P S T R U C T U R E
At December 31, 2004
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E N E R S I S G R O U P S T R U C T U R E
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E N D E S A C H I L E G R O U P S T R U C T U R E
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E N D E S A C H I L E G R O U P S T R U C T U R E
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E N D E S A C H I L E G R O U P S T R U C T U R E
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Endesa Fortaleza plant, Brazil.
P O L Í T I C A D E I N V E R S I O N E S Y F I N A N C I A M I E N T O D E 2 0 0 4
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
51
E L E C T R I C I T Y G E N E R A T I O N
CH ILE
4, 47 7 MW
ARGENTI NA
3,623 MW
PERÚ
967 MW
BR A ZIL
97 7 MW
CO LOM BIA
2,609 MW
N O M B R E D E L C A P I T U L O
N O M B R E D E L C A P I T U L O
52
E N D E S A C H I L E
T H E CO M PA NY
Name:
Empresa Nacional de Electricidad S.A.
E-mail
comunicacion@endesa.cl
Kind of company:
Open corporation
Tax No.:
91,081,000-6
Securities register No.:
N°114
External auditors:
Ernst & Young Serv. Prof. de Auditoría Ltda.
Address:
Santa Rosa N°76, Santiago, Chile
Total number of shares:
8,201,754,580
Telephone No.:
(56-2) 630 9000
Fax:
(56-2) 635 4720
PO Box:
1392, Santiago
Web Site:
www.endesa.cl
Subscribed and paid capital (ThCh$)
1,050,193,846
Holding of Enersis
(direct and indirect)
60.0%
Investments as proportion of Enersis assets:
26.7%
Corporate objects (extract):
Generation and supply of electricity, sale of
consultancy and engineering services in Chile and
abroad, and the construction and exploitation of
infrastructure works.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
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53
View of Ralco reservoir, located in Chile’s Bío Bío Region.
BOA RD O F D I REC TO RS
SEN I O R E XECU T IVES
Chairman
Luis Rivera
Vice Chairman
Antonio Pareja
Directors
Jaime Bauzá
Ignacio Blanco
Enrique García
Carlos Torres
Andrés Regué
Antonio Tuset
Leonidas Vial
Chief Executive Officer
Héctor López
Chief Communications Officer
Renato Fernández
Legal Counsel
Carlos Martín Vergara
Chief Financial and Administration Officer
Alejandro González
Chief Human Resources Officer
Juan Carlos Mundaca
Chief Planning and Control Officer
Julio Valbuena
Chief Trading and Sales Officer
José Venegas
Chief Energy Planning Officer
Rafael Errázuriz
Chief Production and Transport Officer
Rafael Mateo
Chief Generation Officer, Chile
Claudio Iglesis
E L E C T R I C I T Y G E N E R A T I O N
54
EN D ESA CH ILE
Atacama Chile S.A. and GasAtacama Generación S.A., supplying
various mining companies, and with sales on the spot market. The
Enersis is the principal shareholder in Endesa Chile with a
installed capacity of Celta S.A. on this grid is 182 MW, representing
holding of 60.0%. The Group channels its investments in electricity
5% of the SING. Including GasAtacama Generación, in which Endesa
generation in Latin America through Endesa Chile.
Chile holds 50%, the installed capacity on the SING reaches 27%.
The principal activities of Endesa Chile and its subsidiaries are
In Chile, Endesa Chile generated 16,797 GWh and sold 18,462
related to the generation and commercialization of electricity, as well
GWh during 2004.
as the sale of consultancy and engineering services in all fields.
At the consolidated level, Endesa Chile operates 46 plants
S.A.E.S.P. and Emgesa, it operates a total of 2,609 MW of capacity,
in five Latin American countries, with a total installed capacity of
which represents 19% of the country’s installed capacity. These plants
12,333 MW.
generated 11,881 GWh with sales of 15,148 GWh during 2004.
In Colombia, through Central Hidroeléctrica de Betania
In Argentina, through its subsidiaries Central Costanera S.A.
In Peru, through Edegel, it operates a total of 967 MW of
and Hidroeléctrica El Chocón S.A., it operates a total of 3,623 MW
capacity, which represents 22% of the Peruvian grid. Total generation
capacity which represents 15% of the total of the Argentine grid
was 4,136 GWh with sales of 4,328 GWh during 2004.
system. These plants generated 11,290 GWh in 2004 with sales of
11,604 GWh.
Outstanding among the most important electricity projects
developed during 2004 was the start-up of Ralco plant, a reservoir
In Brazil, through Centrais Elétricas Cachoeira Dourada S.A., it
hydroelectric plant located in the BíoBío River 600 km to the south
operates a total of 658 MW of capacity which represents 1% of that
of Santiago, with adduction tunnel and underground machine room
country’s installed capacity, with annual generation of 3,262 GWh
and an installed capacity of 690 MW. This is the most important
and sales of 3,902 GWh. Also, through the interconnection line with
hydroelectric plant in Chile, representing 8% of the installed capacity
Argentina, operated by CIEN, 2,000 MW are added to that market
on the SIC and the third largest hydroelectric plant of Endesa Chile.
whose energy and power is supported by the Argentine subsidiary
Central Costanera S.A.
The Ralco reservoir has a total volume of 1,200 million cubic
meters and covers an area of 3,467 hectares.
Endesa Chile is the principal electricity generator in Chile
and one of the country’s largest companies. It operates a total
With a net fall of 175 meters, a turbineable flow of 452 m3/ s
of 4,477 MW of capacity which represents 38% of the country’s
and an average load factor of 52%, equivalent to 4,560 hours
installed capacity. 76% of the installed capacity of the company and
annually, it permits an annual average generation of 3,150 GWh,
subsidiaries in Chile is hydroelectric and the rest thermal. Endesa
equivalent to 8% of the installed capacity of the SIC. While it is true
Chile participates in the Central Grid System (SIC), the largest in the
that the designed capacity was originally 570 MW, later, following
country which covers about 93% of the population. In has installed
the efficiency achieved in the construction of the hydraulic works
capacity of 4,295 MW on this grid, representing approximately 52%
and taking into account the levels of over-opening of vanes obtained
of the SIC.
in September 2004, an environmental impact declaration was
presented to the National Environmental Commission (Conama)
The company also participates on the Northern Grid (SING)
seeking authorization to operate the plant with a capacity of up to
through its subsidiary Celta S.A. and indirectly through Gasoducto
690 MW; this was approved in December 6, 2004.
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55
Regarding the San Isidro II project, Chile’s 5th Region Corema
two 500 Kv transmission lines covering a distance of about 500 km
on August 16, 2004 gave its final approval of the environmental
between Rincón in Argentina and the Santa Catarina substation in
impact study for the project, a combined-cycle generating unit
Brazil, and has a total capacity of 2,000 MW.
which would operate with natural gas and be located in the district
of Quillota, with a capacity of 370 MW. It expects to generate around
Line I of Cien has contracts with Tractobel for 300 MW and
2,500 GWh annually.
with Furnas for 700 MW. Line II has contracts with Copel for 400
MW, Cerj for 284 MW and Samarco for 25 MW.
Unit 2 of the Isla plant was also modernized in 2004. This
included a change in the control system, protections, and the
Besides generation, Endesa Chile has other businesses, among
voltage and velocity regulators. The change was made due to the
which is Ingendesa which participates in large investment projects
obsolescence of the equipment and to facilitate its future remote
in Chile and Latin America, particularly in the areas of energy,
control.
infrastructure, mining, public utilities and telecommunications,
through ser vices provided to both Group and un-related
Work was also done to leave Unit 2 of the Taltal plant in
companies.
condition for its operation with diesel oil as an alternative fuel.
With respect to the related company Cien, in which Endesa
El Melón S.A. which opened to the public in September 1995. The
Endesa Chile also manages Sociedad Concesionaria Túnel
Chile holds 45% and Endesa Spain 55%, this permits the energy
concession expires in May 2016.
integration of Mercosur and makes possible the export and import
of electricity between Argentina and Brazil in either direction. It has
Endesa Chile employed 1,562 people at December 31, 2004 in
all its companies in Latin America.
INCOM E ST ATE M ENT
MILL IONS OF CHILEAN P ESOS
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
1,032,662
(629,191)
(34,445)
369,025
(165,109)
83,789
20 03
VAR IA TION 03 /04
% CHANGE
943,288
(564,208)
(32,107)
346,974
(183,480)
80,084
89,374
(64,983)
(2,338)
22,051
18,371
3,705
9.5%
(11.5%)
(7.3%)
6.4%
10.0%
4.6%
E L E C T R I C I T Y G E N E R A T I O N
56
E N D E S A F O R T A L E Z A
Command center at Endesa Fortaleza’s plant
T H E CO M PA NY
D I REC TO RS A N D M A N AG E M EN T
Chairman
Francisco Bugallo
Director
Marcelo Llévenes
Director
Juan León Herrera
Chief Executive Officer
Manuel Herrera
Chief Financial Officer
Raimundo Câmara
Chief Technical Officer
José Pires Medeiros
Holding of Enersis (direct and indirect)
48.8%
Investments as proportion of Enersis assets:
0.8%
Corporate objects (extract):
(i) Study, project, construct and explore
electricity production, transmission,
distribution and commercialization systems
that are conceded, permitted or authorized
under any title, and the exercise of other
activities related to the provision of services
of any kind related to the above activities.
(ii) The acquisition, obtaining and
exploration of any rights, concessions and
privileges related to the above activities, and
any related activity; and
(iii) The participation in the capital of other
companies as shareholder or partner,
whatever their objects.
Name
CGTF -Central Geradora Termeléctrica
Fortaleza S.A.
Kind of company
Closely-held foreign corporation
Tax No.:
04,659,917/0001-53
Address:
Rodovia 422, Km 1 s/nº, Complexo Industrial
e Portuário de Pecém Caucaia – Ceará
Postal Code: CEP
61600-000
Telephone No.:
(55-85) 3464-4100
Fax:
(55-85) 3464-4114
E-mail
ilobo@endesabr.com.br
External auditors:
Ernst & Young Auditores Indepentes S/S
Total number of shares:
151,935,779
Subscribed and paid capital (reals)
151,935,779
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57
Top view of Endesa Fortaleza’s plant installations.
Endesa Fortaleza is owned 51% by Endesa and 49% by Enersis.
Fortaleza, other PPT (Thermal Electricity Priority Program) plants of
This combined-cycle plant is located fifty kilometers from the capital
the north-east and Petrobras, with the intervention of ONS and CCEE
of Ceará state and started its commercial operations in December
(ex MAE), whereby the original “lastro”was reestablished for the
2003.
plants signing the agreement. This operating procedure was approved
by Aneel through the note published on December 24, 2004.
Gross energy generation in 2004 was 1,322 GWh and its sales
of energy to Coelce reached 2,690 GWh. The plant uses natural gas
Endesa Fortaleza has a firm gas purchase contract with
as its fuel.
CEGAS / Petrobras for 1,550,000 cubic meters a day under the PPT
During the first half year, it operated for a continuous period
of almost 100 days that enabled it to check the equipment, especially
The installed capacity is 319 MW.
during the guarantee period, which functioned as planned.
conditions.
On January 28, 2004, the National Electricity Agency (Aneel)
installed generating capacity on the SIN (National Integrated Grid)
The market share of Endesa Fortaleza represents 0.5% of the
issued its Resolution No.40 which reduced the “lastro”of the plants
and 3.2% of thermal plants.
in the north-east based on a gas supply problem in the region. On
November 18, 2004, an agreement was signed between Endesa
The company employed 46 people at December 31, 2004.
E L E C T R I C I T Y G E N E R A T I O N
58
Santiago, Chile.
P O L Í T I C A D E I N V E R S I O N E S Y F I N A N C I A M I E N T O D E 2 0 0 4
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
59
E L E C T R I C I T Y D I S T R I B U T I O N
CH ILE
1,371,109 CLIENTS
ARGENTI NA
2,138,753 CLIENTS
PERÚ
912,194 CLIENTS
BR A ZIL
4, 4 48,993 CLIENTS
CO LOM BIA
2,014,672 CLIENTS
N O M B R E D E L C A P I T U L O
N O M B R E D E L C A P I T U L O
60
C O M P A R A T I V E O P E R A T I N G D A T A
DISTRIBUTION
CHILECTRA
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
EDESUR
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
EDELNOR
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
CERJ (Ampla)
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
COELCE
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
CODENSA
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
6,676
9.0%
1,099
1,801
9,731
12.0%
2,050
3,940
2,756
15.7%
673
758
-
-
-
-
-
-
-
-
-
-
-
-
7,256
8.6%
1,133
1,643
10,398
10.1%
2,042
3,515
2,993
13.8%
749
943
5,733
29.3%
1,217
4,376
-
-
-
-
-
-
-
-
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
7,647
7.6%
1,169
1,664
11,160
8.3%
2,078
3,180
3,256
11.7%
805
777
6,424
25.3%
1,341
2,288
-
-
-
-
7,929
23.8%
1,536
2,067
8,175
6.0%
1,212
1,674
11,680
8.1%
2,094
2,999
3,389
9.7%
816
765
7,208
19.1%
1,452
1,897
5,377
13.3%
1,508
1,834
8,217
19.5%
1,628
1,904
8,425
5.4%
1,239
1,383
12,325
7.8%
2,105
2,630
3,423
8.8%
843
722
7,694
15.3%
1,559
1,782
5,709
11.2%
1,652
1,958
8,502
14.4%
1,746
1,213
8,854
5.2%
1,262
868
12,597
10.3%
2,108
2,379
3,583
9.9%
852
618
7,656
19.7%
1,581
1,402
5,894
13.3%
1,796
1,592
8,776
10.5%
1,802
969
9,585
5.4%
1,289
722
12,909
9.9%
2,097
2,267
3,685
8.9%
867
557
6,739
22.7%
1,691
1,354
5,352
13.0%
1,917
1,464
8,673
11.8%
1,850
813
9,952
5.6%
1,319
720
12,138
11.6%
2,090
2,251
3,872
8.5%
871
565
7,145
22.6%
1,778
1,451
5,558
12.9%
2,009
1,401
9,015
10.3%
1,911
802
10,518
5.6%
1,341
745
12,656
11.8%
2,117
2,258
3,968
8.4%
892
554
7,276
23.6%
2,012
1,517
5,905
13.5%
2,109
1,375
9,254
10.2%
1,972
858
11,317
5.2%
1,371
692
13,322
11.8%
2,139
2,277
4,250
8.4%
912
543
7,628
22.8%
2,115
1,408
6,141
13.9%
2,334
1,337
9,656
9.7%
2,015
901
DISTRIBUTION
CHILECTRA
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
EDESUR
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
EDELNOR
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
CERJ (Ampla)
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
COELCE
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
CODENSA
Energy sales (GWh)
Energy losses
Customers (thousands)
Employees
6,676
9.0%
1,099
1,801
9,731
12.0%
2,050
3,940
2,756
15.7%
673
758
-
-
-
-
-
-
-
-
-
-
-
-
7,256
8.6%
1,133
1,643
10,398
10.1%
2,042
3,515
2,993
13.8%
749
943
5,733
29.3%
1,217
4,376
-
-
-
-
-
-
-
-
7,647
7.6%
1,169
1,664
11,160
8.3%
2,078
3,180
3,256
11.7%
805
777
6,424
25.3%
1,341
2,288
-
-
-
-
7,929
23.8%
1,536
2,067
8,175
6.0%
1,212
1,674
11,680
8.1%
2,094
2,999
3,389
9.7%
816
765
7,208
19.1%
1,452
1,897
5,377
13.3%
1,508
1,834
8,217
19.5%
1,628
1,904
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
61
8,425
5.4%
1,239
1,383
12,325
7.8%
2,105
2,630
3,423
8.8%
843
722
7,694
15.3%
1,559
1,782
5,709
11.2%
1,652
1,958
8,502
14.4%
1,746
1,213
8,854
5.2%
1,262
868
12,597
10.3%
2,108
2,379
3,583
9.9%
852
618
7,656
19.7%
1,581
1,402
5,894
13.3%
1,796
1,592
8,776
10.5%
1,802
969
9,585
5.4%
1,289
722
12,909
9.9%
2,097
2,267
3,685
8.9%
867
557
6,739
22.7%
1,691
1,354
5,352
13.0%
1,917
1,464
8,673
11.8%
1,850
813
9,952
5.6%
1,319
720
12,138
11.6%
2,090
2,251
3,872
8.5%
871
565
7,145
22.6%
1,778
1,451
5,558
12.9%
2,009
1,401
9,015
10.3%
1,911
802
10,518
5.6%
1,341
745
12,656
11.8%
2,117
2,258
3,968
8.4%
892
554
7,276
23.6%
2,012
1,517
5,905
13.5%
2,109
1,375
9,254
10.2%
1,972
858
11,317
5.2%
1,371
692
13,322
11.8%
2,139
2,277
4,250
8.4%
912
543
7,628
22.8%
2,115
1,408
6,141
13.9%
2,334
1,337
9,656
9.7%
2,015
901
2003 figures have been adjusted under the criteria and methodologies applicables in 2004
C O M P A R A T I V E O P E R A T I N G D A T A
62
C H I L E C T R A
Comercial office in Providencia
T H E CO M PA NY
Name
Chilectra S.A.
Kind of company
Open corporation
Tax No.:
96,524,320-8
Address:
Santa Rosa N°76,
Santiago, Chile
Telephone No.:
(56-2) 675 2000
Fax:
(56-2) 675 2999
PO Box:
1557 Santiago
Web Site:
www.chilectra.cl
E-mail
comunicacion@chilectra.cl
Securities Register No.
N°0321
External auditors:
KPMG Auditores Consultores Ltda.
Total number of shares:
366,045,401
Holding of Enersis (direct and indirect)
292,064,473
Participación de Enersis (directa e indirecta)
98.2%
Investments as proportion of Enersis assets:
12.8%
Corporate objects (extract):
Exploit in Chile and abroad
the distribution and sale of
hydroelectric, thermal or other
kinds of electricity, and the
distribution, transport and sale
of fuel of any kind, supplying this
energy or fuel to the greatest
number of customers directly or
through other companies.
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63
COS, Center Sistem Operation.
BOA RD O F D I REC TO RS
SEN I O R E XECU T IVES
Chairman
Jorge Rosenblut
Vice Chairman
José M. Fernández
Directors
Alberto Martín
Pedro Buttazzoni
Hernán F. Errázuriz
Marcelo Llévenes
Álvaro Quiralte
Chief Executive Officer
Rafael López
Chief Communications Officer
Marcelo Castillo
Legal Counsel
Gonzalo Vial
Chief Regional Distribution Officer
Marcelo Silva
Chief Regional Services Officer
Cristóbal Sánchez
Chief Economic and Control Officer
Juan Pablo Spoerer
Chief Innovation & Human Resources Officer
Cristián Herrera
Chief Regulation Officer
Guillermo Pérez
Chief Operations & Market Performance Officer
Juan Camilo Olavarría
Chief Commercial Officer
Alfredo Herrera
Chief Networks Management Officer
Enrique Fernández
Chief Processes Management Officer
Cristián Montero
Chief Large Customers Officer
Christian Mosqueira
E L E C T R I C I T Y D I S T R I B U T I O N
64
CH ILEC TR A
On the other hand, Chilectra bought energy from various
generators in 2004 as follows: AES Gener (33.2%), Endesa Chile
Chilectra is Chile’s largest electricity distributor in terms of
(40.1%), Colbún (21.8%), Puyehue (0.8%) and others (4.1%).
energy sales. Its concession area covers 33 municipalities in the
Metropolitan Region, incorporating a total of 2,118 km2. This includes
Tariffs
concession areas held by Empresa Eléctrica Colina Ltda. and Luz Andes
Ltda. It has 355 km of high-tension lines, 53 substations and 133
Distribution tariffs in Chile are set every four years. The last
power transformers with a capacity of 5,830 MVA.
tariff-setting was in November 2004, through Ministry of the Economy
Decree 276 which set tariff formulas applicable from November 4,
Enersis, its principal shareholder and controller, has a
2004 on supplies subject to price regulation made by electricity
shareholding of 98.2%.
distribution concession-holders.
The new tariffs have translated into a reduction of 4.5% in
Chilectra’s sales of energy and capacity.
The following regulatory matters occurred during 2004:
•
The so-called “Short Law” came into effect in March, whose
principal effect was to resolve the lack of investment in the
transmission segment. It also covered issues like reduction in
the limit for qualifying as a free customer (from 2.000 MW
to 500 MW), the establishment of distribution tolls and the
constitution of arbitration proceedings for resolving disputes,
based on a panel of experts.
•
The panel of experts regulation was promulgated on July 7
and published on September 16 (Supreme Decree 181).
•
The Free Competition Defense Tribunal appointed members of
the experts panel (July 12).
•
The setting of prices for related services, which begun in late
2003, was established in Supreme Decree 197, published on
October 14, 2004.
Energy Losses
Physical Sales and Purchases
reaching a level of 5.2%, compared to 5.6% in 2003. This makes
Chilectra again set a new record in 2004 in terms of energy losses,
Chilectra a world-category operator in controlling losses.
Physical energy sales in 2004 were 11,317 GWh, representing
a 7.6% increase over 2003.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
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65
Customers
This transformation and modernization effort was also
translated into a renewal of the corporate image in order to
With respect to its commercial activities, Chilectra‘s customers
consolidate and transmit the new company philosophy to customers,
at December 31 totaled 1,371,109, representing a 2.2% increase over
employees and the community in general.
the year before.
Chilectra signed different contracts with customers during the
launched its Activa Chilectra card on the market, offering customers
year, the most important being:
financing for the purchase of products offered by the company
(electrical domestic appliances, video equipment, computers, air
Within the Chilectra's 21st Century strategic plan, the company
•
Empresa de Transportes de Pasajeros Metro S.A.: contract for
conditioning, etc.).
supplying electricity for the next 10 years to the Mtropolitan
Region’s most important means of transport which projects
Regarding related products and services, the company
consumption of 80 MW and 300 GWh in annual energy.
presented a new range to the market. It has established an alliance
•
Sociedad Concesionaria Costanera Norte S.A.: contract for
with Smartcom for the sale of mobile telephones at its commercial
supplying electricity until 2033, with contemplated capacity
offices, with much beter sales than expected (thirty thousand). It
of 2,500 kW.
Chilectra 21st Century
also strengthened the sale of non-traditional products like heat-
accumulating heaters, electric water heaters and air-conditioning
equipment, and services like Chilectra Hogar, RDU (emergency repairs)
and PAD (home service orders). It has also increased its insurance
The company launched Chilectra 21st Century in 2004, a
broking business to customers, currently offering the protected family,
strategic plan reflecting the company’s vision, mission and values
protected loan and obligatory automobile insurance policies. Sales of
and seeking to increase operational efficiency and service vocation,
these products and services reached ThCh$1,769,084 in 2004.
and complemented by the adoption of a pro-active role in knowing
and satisfying customer needs.
Chilectra has organized various activities to get closer to
the community, like the Chilectra Cup, Beat Drugs; Santiago’s
This strategic plan has also focused on making Chilectra a
International Book Fair; Search for Lost Children and Agreement
corporate citizen committed to the development of the city of
with FOAL and the creation of Fundación Chilectra Activa.
Santiago, through the introduction of various initiatives centered
on improving the living standards of its inhabitants in both the
Chilectra employed 692 people at December 31, 2004, with a
environmental and social areas.
productivity of 1,981 customers per employee which is 10.1% higher
INCOME STA TE ME NT
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
483,006
(342,986)
(42,408)
97,612
(27,903)
77,322
than in 2003.
MILL IONS OF CHILEA N P ESO S
20 03
444,803
(314,129)
(35,299)
95,375
(65,943)
52,756
VAR IA TION 03 /04
% CHANGE
38,203
(28,857)
(7,109)
2,236
38,041
24,566
8.6%
(9.2%)
(20.1%)
2.3%
57.7%
46.6%
E L E C T R I C I T Y D I S T R I B U T I O N
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E D E S U R
T H E CO M PA NY
City of Buenos Aires, Argentina.
Name:
Empresa Distribuidora Sur S.A.
E-mail
emailservicio@edesur.com.ar
Kind of company:
Foreign corporation
Tax No.:
30-65511651-2
Address:
San José 140 (1076), Capital Federal,
Argentina
Telephone:
(54-11) 4370 3700
Fax:
(54-11) 4381 0708
Web Site:
www.edesur.com.ar
External auditors:
Deloitte & Co. S.R.L.
Total number of shares:
898,585,028
Subscribed and paid capital (Argentine pesos)
898,585,028
Holding of Enersis (direct and indirect)
65.1%
Investments as proportion of Enersis assets:
2.4%
Corporate objects (extract):
Distribution and sale of electricity and
related business.
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Medium-tension line works in the streets of Buenos Aires.
BOA RD O F D I REC TO RS
SEN I O R E XECU T IVES
Chairman
Rafael López
Vice Chairman
Rafael Fernández
Directors
Rafael Arias
Daniel Maggi
Alfredo Mac Laughlin
Marcelo Silva
Julio Valenzuela
Gonzalo Vial
Jorge Volpe
Alternate Directors
Pedro Aramburu
Alan Arntsen
Manuel Benites
Jorge Gustavo Casagrande
Santiago Daireaux
Roberto Fagan
Horacio Babino
Mariano Grondona
Pablo Lepiane
Chief Executive Officer
José María Hidalgo
Chief Environment & Quality Officer
José María Gottig
Chief Communications Officer
Daniel Martini
Chief Internal Audit Officer
Jorge Lukaszczuk
Chief Legal Affairs Officer
Álvaro Estivariz
Chief Human Resources Officer
Héctor Ruiz
Chief Commercial Officer
Sandro Rollan
Chief Distribution Officer
Daniel Colombo
Chief Services Officer
Daniel Alasia
Chief Planning & Economic Control Officer
Juan Garade
Chief Administration & Finance Officer
Juan Verbitsky
E L E C T R I C I T Y D I S T R I B U T I O N
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ED ESU R
Edesur’s principal object is the distribution and sale of electricity
in the southern zone of Buenos Aires, comprising two-thirds of the
Federal Capital area and twelve districts of the province of Buenos
Aires. Its concession area covers 3,309 km2.
Enersis, its principal shareholder and controller, has a direct and
indirect shareholding of 65.1%.
Physical Sales
The company supplied 13,322 GWh to its end customers in
2004, representing an increase of 5.3% over 2003, corresponding
22.8% to the residential sector, 32.7% to the commercial sector,
21.5% to the industrial sector and 23.0% to others.
Tariffs
All the efforts of Edesur, whether technical, commercial,
administrative, fiscal and financial, were directed to alleviating,
wherever possible, the serious effects of the emergency and the
government measures to “peso-ify” and freeze distribution tariffs.
Despite the conditions imposed, Edesur made every effort to make
the minimum necessary investments for sustaining the service. The
investment made by Edesur in 2004 amounted to over US$50 million.
As a result of this and the investments made previously, the technical
service quality indicators (number and duration of interruptions) did
not show much change compared to 2003.
Law 25,561 passed by congress and published in the Argentine
official bulletin on January 7, 2002, declared a public emergency in
social, economic, administrative, financial and exchange matters.
This regulation amended the convertibility law and annulled the dollar
or other foreign currency adjustment clauses and indexation clauses
based on other countries’ price indices and any other indexation
mechanism in contracts signed by the public administration, including
public works and utilities. The resultant prices and tariffs of these
clauses were established in pesos at an exchange rate of 1 peso = 1
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US dollar. The passing of this “Economic Emergency” law was an act
Customers
that affected the situation of Edesur by producing serious damage to
the company’s economic-financial equation and dragged this down
Edesur provides electricity to 2,138,753 customers, 1% more
to a particularly critical state for providing the service and meeting
than the year before. Of these, 1,844,244 (86.2%) are residential,
its contractual obligations in the terms originally agreed.
259,425 (12.1%) are commercial, 26,674 (1.2%) are industrial and
8,410 (0.4%) correspond to other customers.
In order to repair this situation, the Argentine authority has
decreed different processes and negotiation periods for public works
Regarding unpaid bills, the maximum efforts have been made
and utilities contracts. In conclusion, three years after the initial
to reduce the amounts due through an effective policy of cutting
approach and beyod the period set in regulations, the renegotiation
supplies, supported by payment plans and facilities, in order to
of contracts did not achieve satisfactory results nor showed significant
reduce the amounts outstanding and continue with a systematic
progress.
Energy Losses
improvement in the balance due compared to the billing amounts.
As a result, the company’s recoveries were 97.8%.
Despite the economy growth during 2004, the population
“Edesur Empresas” business line, and the growth in the invoicing of
living below poverty level and destitute homes continued to be
services for the maintenance of street lighting in different districts
Notable was the growth in large customer works through the
significant, so theft of energy and unpaid bills largely concentrated
of the Federal Capital.
the attention of the commercial management. Thanks to this, Edesur
managed to hold its loss ratio to 11.8% in 2004. In order to control the
Employees
losses, Edesur implemented programs that prevented the fraudulent
meter tampering and illegal connections, and carried out traditional
There were no significant changes in the number of people
normalization projects, the cables raisings, etc.
employed compared to 2003, reaching 2,277 people at December
31, 2004. The productivity rate was 939 customers per employee,
similar to 2003.
INCOM E ST ATE M ENT
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
208,982
(181,425)
(27,811)
(254)
(8,808)
(17,130)
MILL IONS OF CHILEAN P ESOS
20 03
188,541
(165,195)
(28,724)
(5,378)
(9,581)
(27,779)
VAR IA TION 03 /04
% CHANGE
20,441
(16,230)
913
5,125
773
10,649
10.8%
(9.8%)
3.2%
95.3%
8.1%
38.3%
E L E C T R I C I T Y D I S T R I B U T I O N
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E D E L N O R
T H E CO M PA NY
Edelnor’s system dispatch center, Lima, Peru.
Total number of shares:
985,380,267
Subscribed and paid capital (Peruvian soles)
985,380,267
Holding of Enersis (direct and indirect)
33.4%
Corporate objects (extract):
Distribution, transmission and
generation of electricity.
Name:
Empresa de Distribución Eléctrica de
Lima Norte S.A.A.
Kind of company:
Foreign open corporation
Tax No.:
20,269,985,900
Address:
Jr. Teniente Cesar López Rojas 201
Urb. Maranga, San Miguel, Lima,
Perú
Telephone
(51-1) 561 2001
Fax:
(51-1) 452 3007
Web Site:
www.edelnor.com.pe
E-mail
enlinea@edelnor.com.pe
External auditors:
Gris, Hernández y Asociados, S.C.-
Deloitte & Touche
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Equipment for electrical emergency services.
BOA RD O F D I REC TO RS
SEN I O R E XECU T IVES
Chairman
Reynaldo Llosa
Vice Chairman
Ignacio Blanco
Directors
Fernando Bergasa
Róger Espinosa
Cristián Herrera
Alfredo Llorente
Guillermo Jesús Morales
Ricardo Vega
Chief Executive Officer
Ignacio Blanco
Chief Commercial Officer
Carlos Solís
Chief Organization & Human Resources Officer
Rocío Pachas
Chief Technical Officer
Walter Sciutto
Chief Administration & Control Officer
Juan Yamamoto
Chief Legal & Regulation Officer
Luis Salem
Chief Communications Officer
José Otárola
E L E C T R I C I T Y D I S T R I B U T I O N
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ED ELN O R
Physical Sales and Purchases
Edelnor is the public utility concession-holding company for
Physical energy sales in 2004 were 4,250 GWh, a 7.1% increase
the northern part of Metropolitan Lima and the province of Callao,
over 2003. Of the total sold, 36.4% was residential, 26.2% industrial,
plus the provinces of Huaura, Huaral, Barranca and Oyón. It serves
17.2% commercial and 20.2% corresponded to other sectors.
52 districts on an exclusive basis and shares 5 other districts with
the southern area distributor.
Edelnor in 2004 bought energy mainly from Electroperú
(50.7%), Edegel (24.8%), Eepsa (4.4%), Egenor (14.3%) and Cahua
In the Metropolitan area, Edelnor’s concession zone mainly
(5.7%).
covers the industrial part of Lima and some populous city districts.
The concession zone granted to Edelnor covers a total of 2,440 km2,
of which 1,838 km2 correspond to northern Lima and Callao.
Enersis has a direct and indirect shareholding of 33.4% in the
company.
Tariffs
The Peruvian authority will set distribution tariffs on November
1, 2005. Tariffs are set by considering an efficient model distribution
company and taking into account the following components:
commercial costs related to the customer, standard losses of capacity
and energy, standard investment costs, maintenance and operation
of distribution per unit of capacity supplied. The tariff-setting process
began in November 2004. Up to date, Edelnor has presented all
the information within the time limits and in the form required by
the authority.
Energy Losses
The energy loss indicator at the end of 2004 was 8.4%, the
same as the year before, after having carried out a loss control plan
by distribution substation under the priority set by the largest loss
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73
per customer criteria. This method gives priority to control measures
The “Edelnor Constructores” program was launched in
and investment assignment according to the substations’ loss levels,
December 2003, establishing a balance between our mission to
in order to seek the highest productivity from the operation. A total
improve the living standards of our customers and our commercial
of 1,423 substations were therefore focused which concentrated a
objective of promoting the installation and use of electrical appliances
monthly loss of 11.7 GWh, reducing this to 8.7 GWh by the end of 2004,
in the concession zone. The purpose is to establish alliances with
i.e. by 25%. 473,000 inspections were also made and 24.3 GWh were
construction, real estate and/or housing development promoter
recovered under the concept of recovery of un-recorded consumption.
companies to encourage investment in electrical appliances for the
Finally, toward the last quarter of the year, normalization works and
houses being built. Throughout 2004, Edelnor Constructores has
network reforms were notably increased for the marginal areas of
established alliances with 89 construction and real estate firms to
the concession where there is mass theft that reaches levels of 70%,
the benefit of 3,556 families, by equipping their homes with 4,419
a high level of delinquency and opposition to works and a relapse
electrical appliances, mostly water heaters, and generating sales of
rate of over 50%.
US$426,966 in 2004.
Edelnor invested more than US$20 million in 2004, mainly in
“Seguro Más por un Dólar” is a product directed to customers
the improvement and expansion of the electricity system and public
in the social-economic segments C and D, consisting of a multiple
lighting, and also in the implementation of corporate information
benefits insurance policy covering replacement of stolen meters,
systems.
Customers
fire, accidents, burial expenses, payment of electricity bills for one
year, etc. At December, 2004, 115,780 customers were covered by
this insurance; customer number 100,000 was contracted during
February 2004.
Electricity was supplied to 912,194 customers of which 93.4%
were residential, 4.5% commercial, 0.1% industrial and 2.0%
Employees
corresponded to other customers.
There were 543 employees at December 31, 2004, with a
productivity of 1,680 customers per employee, 4.3% more than in
2003.
INCOM E ST ATE M ENT
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
182,363
(137,720)
(16,804)
27,838
(9,717)
(523)
MILL IONS OF CHILEAN P ESOS
20 03
VAR IA TION 03 /04
% CHANGE
180,345
(135,623)
(17,522)
27,201
(3,149)
13,404
2,018
(2,097)
718
638
(6,568)
(13,927)
1.1%
(1.5%)
4.1%
2.3%
(208.6%)
(103.9%)
E L E C T R I C I T Y D I S T R I B U T I O N
74
C E R J ( A M P L A )
T H E CO M PA NY
Río de Janeiro, Brazil.
Name:
Cerj – Companhia de Eletricidade do Rio
de Janeiro
Kind of company:
Foreign open corporation
Tax No.:
33.050.071/0001-58
Address:
Praça Leoni Ramos, N°01 – São
Domingos, Niteroi, Rio de Janeiro,
Brazil
Telephone:
(55-21) 2613 7000
Fax:
(55-21) 2613 7153
Web Site:
www.ampla.com
E-mail
arochinha@ampla.com
External auditors:
Deloitte Touche Tohmatsu
Total number of shares:
4,235,186,511,194
Subscribed and paid capital (Reals)
1,625,424,306
Holding of Enersis (direct and indirect)
80.4%
Investments as proportion of Enersis assets:
2.7%
Corporate objects (extract):
Study, plan, project, construct and explore
electricity production, transformation,
distribution and commercialization systems,
and provide related services; make
investigations into the energy sector and
participate in other companies in the energy
sector as a shareholder.
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Customer attention in Niteroi.
BOA RD O F D I REC TO RS
SEN I O R E XECU T IVES
Chairman
António Melo
Vice Chairman
Gonzalo Carbó
Directors
Alfonso Arias
Rafael López
Carlos Silva
Marcelo Silva
Martín Serrano
(Gerente de Finanzas Internacionales de Enersis)
Francisco Pereira
Marcelo Llévenes
Alternate Directors
José Alves
Fernando Urbina
Antonio José Sellare
Joaquim Ferreira
Chief Executive Officer
Marcelo Llévenes
Chief Regulations Officer
José Alves
Chief Commercial Officer
Gonzalo Mardones
Chief Human Resources Officer
Eunice Rios
Chief Loss Management Officer
Claudio Rivera
Chief Administration & Finance Officer
Abel Alves
Director Jurídico
Ana Gonçalves
Chief Technical Officer
Maria L M Olano
Chief Institutional Relations Officer
Mário de Carvalho
E L E C T R I C I T Y D I S T R I B U T I O N
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CER J (A MPL A)
Tariffs
Cerj (Ampla) is an electricity distribution company that covers
The ANEEL approved the tariff adjustment for Ampla on
73.3% of the state of Río de Janeiro, an area of 32,054 km2. The
December 23, 2004. The effective increase in the 2005 tariff is 14.8%
population of the zone is approximately 8 million, living in 66
over that for 2004, being the combined effect of the 2004 tariff
municipalities, the main ones being Niteroi, Sao Gonçalo, Petrópolis,
adjustment and the recalculation of the 2003 tariff revision.
Campos and the coastal area of Los Lagos.
Energy Losses
Enersis has a direct and indirect shareholding of 80.4% of the
company.
Energy Sales
Cerj managed to contain the natural increase in losses in 2004
to finally reduce them to 22.8% by the end of the year, 0.8% less
than the year before. The reduction in the loss rate is the result of
the application of innovative measures and a better understanding
of the effectiveness of each action for a given kind of customer. In
certain cases, it was necessary to design an anti-theft electrical
network (DAT network) and, in others, actions for combating theft,
improving collections and carrying out commercial activities were
taken together with social actions (integral project). In other areas, it
was just necessary to follow the traditional approach (normalization
project). The investment in combating losses was BR$109.6 million
(approximately US$41 million).
The DAT networks consist of replacing the existing electricity
network by one that prevents the customers direct connection. The
DAT solution makes sense when the theft problem is concentrated
Cerj supplied 7,628 GWh during the year of which 41.1%
on direct connections to the network (clandestine and overdue
corresponded to residential customers, 19.5% to commercial, 19.8%
customers). 94,740 customers were connected with DAT technology
to industrial and 19.6% to other customers.
in 2004 with the following results:
•
Reduction in losses from 52.9% to 9.8% in the greatest losses
areas.
•
•
41% increase in the billings of these customers.
The collection rate increased by 3.9% compared to customers
without DATR networks.
•
26% reduction in the total debt of these customers.
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Customers
company to show the transformation that took place in 2004 and the
successes in improving its quality ratings and satisfying customers.
Cerj had 2,115,403 customers of which 86.5% were residential,
It also arises from the need to separate the company entirely from
6.4% commercial, 0.3% industrial and 6.8% corresponded to other
its past. The new brand positions Ampla as a company “simple in
sectors.
essence and daring and innovative in attitude”.
To attend new customers, the distribution network was
Employees
extended by 376 km in medium and low tension and 6,339
distribution transformers were installed. 14,775 customers were
The company reduced the number of its employees by 7.2%
attended in 1,786 “universalization” projects. These represented a
to 1,408, with a productivity of 1,502 customers per employee,
total investment of BR$80 million (approximately US$30 million)
13.3% better than in 2003. It should be pointed out that Ampla has
in 2004.
reduced its hierarchical levels from seven to four, and the number of
departmental heads from 282 to 86, in order to make the company
The commercial activity was characterized by the launching of
and its processes less bureaucratic.
a new brand, “Ampla”, which arose from the need to reposition the
INCOM E ST ATE M ENT
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
354,638
(293,145)
(14,600)
46,892
(75,373)
(30,959)
MILL IONS OF CHILEAN P ESOS
20 03
VAR IA TION 03 /04
% CHANGE
325,533
(289,209)
(11,199)
25,125
(154,919)
(101,243)
29,105
(3,936)
(3,401)
21,767
79,546
70,284
8.9%
(1.4%)
(30.4%)
86.6%
51.3%
69.4%
E L E C T R I C I T Y D I S T R I B U T I O N
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Fortaleza, Brazil.
C O E L C E
T H E CO M PA NY
Name:
Companhia Energética do Ceará
External auditors:
Deloitte Touche Tohmatsu
Total number of shares:
155,710,600,088
Subscribed and paid capital (Reals)
433,057,722
Holding of Enersis (direct and indirect)
31.2%
Iorporate objects (extract):
Explore electricity production, transmission,
distribution and commercialization and
related services in the state of Ceará
Kind of company:
Foreign open corporation
Tax No.:
07.047.251/0001-70
Address:
Av. Barão de Studart, 2917/83, Bairro
Dionísio Torres, Fortaleza, Ceará, Brazil
Telephone:
(55-85) 3216 1100
Fax:
(55-85) 3216 1410
Web Site:
www.coelce.com.br
E-mail:
investor@coelce.com.br
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Nightfall at Fortaleza beach in north-east Brazil.
BOA RD O F D I REC TO RS
SEN I O R E XECU T IVES
Chief Executive Officer
Cristián Fierro
Chief Institutional Projects Officer
José Nunes
Chief Commercial Officer
Luciano Galasso
Chief Distribution Officer
José Távora
Chief Control and Strategic Planning Officer
Abel Pérez
Chief Organization & Human Resources Officer
José Ferreira
Chief Finance, Administration & Institutional Relations Officer
Antonio Alves
Chairman
Marcelo Llévenes
Vice Chairman
Luciano Galasso
Directors
Eunice Rios
Cristóbal Sánchez
Antônio Cleber Uchoa
José Alves
Jorge Parente
Carlos Silva
Luis Gastão Bittencourt
Fernando de Moura
Gonzalo Vial
Alternate Directors
José Nunes
Antonio Viana
Antônio Basílio Pires e
Priscila Sartori
Antônio José Sellare
Juarez Ferreira
Antônio Gouvêa
E L E C T R I C I T Y D I S T R I B U T I O N
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CO ELCE
Energy Sales and Purchases
Coelce is the electricity distribution company of the state of
Energy sales amounted to 6,141 GWh in 2004, i.e. 4.0% higher
Ceará in north-east Brazil, with a concession zone of 148,825 km2.
than in 2003. Of these, 29.7% were to residential customers, 18.1%
The company serves a population of more than seven million.
to commercial, 28.9% to industrial and 23.3% to other customers.
Enersis has a direct and indirect shareholding of 31.2% of the
in 2003, with Chesf (a hydroelectric generating company) supplying
company.
55.42%, Endesa Fortaleza 36.29% and others 8.29%.
Coelce bought a total of 7,068 GWh to meet demand, 3.9% more than
Because of the gradual reduction in the amounts of energy
and demand of the initial contracts with the supplier Chesf and in
accordance with Decree 5,163/2004, Coelce was a buyer in the tender
for pre-existing energy made on December 7, 2004 by the Ministry
of Mines and Energy as part of the new energy model imposed by
decree on July 30, 2004.
45,311 GWh were contracted for the period 2005-2014 at lower
prices than those then prevailing in the market. Each new contract
has a term of 8 years with supplies starting in 2005, 2006 and 2007.
These contracts will partially replace the present contracts with CIEN
that expire in December 2004, Chesf and the increases in demand
during the period.
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Tariffs
Coelce made investments of approximate US$50 million in
As defined in the concession contract, the supply tariffs
2004, 27% more than in 2003. A total of 78,214 new customers were
were adjusted on April 22 by 11.1%. This recognized new values
connected to the low-tension electricity network and investments
in the calculation of 2003 tariff revision, from 31.3% to 32.4%,
were also made mainly in demand, supply quality and energy
generating an increased income to be recognized in the 2004 to
losses.
2006 adjustments.
Energy Losses
The census of public lighting was also up-dated which allowed
us to increase the energy invoiced by 600 MW per month, an increase
of 2.2% of total street lighting sales. Various actions were taken
The year 2004 saw the continuation of the plan to control
for the recovery and collection of unpaid bills, with positive results.
losses that began in 2003, in which new actions were taken to
This is confirmed by outstanding debt at December 2004 being paid
discipline the market and control this important variable for the
52.2 days from billing which is lower than the 64.8 days recorded
company. The traditional normalization projects, large customers
in 2003, showing a recovery rate of 100.4% compared to 99.7% the
and PIMT districts were carried out and achieved practically all the
year before.
targets set with satisfactory results. In this way, we began in 2004
the process of measuring the losses by regional frontier in order
Continuing with its policy of a company committed to the
to identify which are the areas of the state of Ceará that have the
social-cultural development of the state of Ceará, Coelce continued
highest loss ratings and, with these results, focus the application of
with its project “Coelce en las escuelas” whose specific purpose is to
resources on loss control projects. The losses in 2004 were 13.9%
work in actions that tend to promote learning oriented to the use of
compared to 13.5% in 2003.
Customers
electricity and the environment, and to contribute directly to poor
communities throughout the state of Ceará, focused on children
between 5 and 9 years old. This Coelce program in the schools already
covers 5,173 children in 39 schools.
Coelce, through three services (Coelce Domiciliario, Kit de
Energía and Seguro Súper 3 +1), provides convenience and security
Employees
to the company’s 2,333,590 customers. The company is thus
repositioning itself in the market, reinforcing the image of a provider
The company employed 1,337 people at December 31, 2004,
of solutions that complement the electricity distribution business.
with a productivity of 1,746 customers per employee, representing
an improvement of 13.8% compared to 2003.
INCOME STA TE ME NT
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
264,358
(229,674)
(29,782)
4,902
(18,286)
(14,040)
MILL IONS OF CHILEA N P ESO S
20 03
VAR IA TION 03 /04
% CHANGE
212,572
(162,022)
(30,362)
20,188
(26,386)
(10,433)
51,786
(67,652)
580
(15,286)
8,100
(3,607)
24.4%
(41.8%)
1.9%
(75.7%)
30.7%
(34.4%)
E L E C T R I C I T Y D I S T R I B U T I O N
82
City of Santa Fe de Bogotá, Colombia.
C O D E N S A
T H E CO M PA NY
Name:
Codensa S.A. E.S.P.
Kind of company:
Foreign corporation
Tax No.:
830,037,248-0
Total number of shares:
132,093,274
Subscribed and paid capital (Colombian pesos)
1,320,932,740,000
Holding of Enersis (direct and indirect)
21.7%
Address
Carrera 13 A N° 93-66, Bogotá, Colombia
Investments as proportion of Enersis assets:
2.8%
Corporate objects (extract):
Distribution and commercialization of electricity
and related services, the carrying out of
works, designs and consultancy in electrical
engineering, and the sale of products for the
benefit of its customers.
Telephone:
(571) 601 6060
Fax:
(571) 601 5917
Web Site:
www.codensa.com.co
E-mail:
tservice@codensa.com.co
External auditors:
Deloitte Colombia Ltda.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
83
Codensa service operators
BOA RD O F D I REC TO RS
SEN I O R E XECU T IVES
Chairman
Andrés Regué
Directors
Cristóbal Sánchez
José Inostroza
Juan Spoerer
Alfredo Ergas
(Chief Regional Finance Officer of Enersis)
José Vargas
Pedro Rodríguez
Edgar Ruiz
Carlos Bello
Alternate Directors
David Acosta
Germán Castro
Luis Larumbe
Roberto Ospina
Omar Serrano
Henry Navarro
Héctor Zambrano
Francisco Miranda
Luis Rueda
Chief Executive Officer
José Inostroza
Chief Commercial Officer
David Acosta
Chief Quality Officer
Carlos Durán
Chief Communications Officer
Emilia Sarracino
Chief Distribution Officer
Germán Castro
Chief Finance & Administration Officer
Luis Larumbe
Chief Legal Affairs Officer
Alvaro Camacho
Chief Planning & Control Officer
Roberto Ospina
Chief Human Resources Officer
Carlos Alberto Niño Forero
Chief Regulations Officer
Omar Serrano
Chief Auditing Officer
Alba Urrea
E L E C T R I C I T Y D I S T R I B U T I O N
84
CO D ENSA
Tariffs
Codensa distributes and sells energy in Bogotá and in 96
Codensa’s distribution system tariff was set for the period 2003-
municipalities in the departments of Cundinamarca, Boyacá and
2007. The CREG accepted the request for revision of the distribution
Tolima. The concession area covers 14,087 km2.
tolls approved in 2003 presented by Codensa, by its Resolution
Enersis has a direct and indirect shareholding of 21.7% in the
the company’s electrical infrastructure and gave due recognition to
CREG-065 of 2004, which corrected the urban-rural composition of
company.
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Energy Sales
the underground infrastructure required by municipal regulations.
This claim represents a higher annual income for Codensa of around
US$11million over the next three years. On the other hand, CREG has
now accumulated two years delay in the revision of the tariff formula
and the publishing of the regulation governing the commercialization
of energy and its remuneration. It is expected that the CREG will
define these matters in the first half of 2005.
Energy Losses
The loss rate reduced from 10.2% in 2003 to 9.7% in 2004.
Loss control management was focused on metering, seeking
greater effectiveness in theft inspections. Work was also done in
the normalization of district electricity networks through micropimt
programs. A project was begun in 2004 for the digitalization of files of
Sales grew by 4.3% during 2004 to 9,656 GWh of which 36.6%
unrecorded consumption in the search for improvements in the debt
was to residential customers, 13.7% to commercial, 5.7% to industrial
forgiveness and write-off process for un-recorded consumption.
and 44.0% to other customers.
Tools were employed in 2004 for improving the operative
management of loss control and the rate of energy loss detection.
These included the implementation of signal protection systems in
low-tension metering equipment, inspection equipment as a function
of the economic activity, analysis of customer consumption and
characteristics, the use of split nucleus transformers and ecometers
especially in the preferential customer segment and of portable
metering equipment directly connected to MT.
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85
Customers
Infrastructure investment and maintenance works were carried
out in 2004 amounting to US$36 million in demand projects, supply
Codensa’s share of the Colombian market in 2004 was 14.7%.
quality, network safety, etc.
The company serves 2,014,672 customers, being 2.2% more than in
the previous year, consisting of 88.8% residential, 9.3% commercial,
Codensa Services obtained its ISO 9,001, 2000 version,
1.7% industrial and 0.3% other customers.
certification for the commercialization and construction of high-
tension projects, thus placing the company in the leadership in the
Using overdue payment control programs, the company
provision of this kind of engineering services. Notable were the
recorded an unpaid rate of 49.22% of its commercial portfolio, the
Christmas lighting projects that achieved sales of around COP1,700
lowest level in recent years.
million.
A “Payment Culture” program was launched in October which
New sales business generated revenues of COP61,874 million
classifies customers according to their payment history over the past
(some US$26 million) between infrastructure rentals, electrical works,
twelve months in order to determine the non-suspension of those
“Codensa Home” and “Codensa Services”.
that have maintained a good payment record. We also developed
a service through phone operator for the collection of invoices
(“Gestión de Telecobranza”) in complementation of the portfolio
Employees
management via phone service. The personalized negotiation and
agreements attention group dealt with customers having high debts
Codensa employed a total of 901 people at December 31, 2004,
and proposed repayment alternatives, thus improving recoveries and
with a productivity of 2,236 customers per employee, 2.7% lower
the company’s image.
than in 2003.
INCOM E ST ATE M ENT
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
365,513
(274,633)
(6,431)
84,449
3,382
56,675
MILL IONS OF CHILEAN P ESOS
20 03
VAR IA TION 03 /04
% CHANGE
299,459
(254,222)
(10,662)
34,574
6,502
18,471
66,054
(20,411)
4,231
49,874
(3,120)
38,204
22.1%
(8.0%)
39.7%
144.3%
(48.0%)
206.8%
E L E C T R I C I T Y D I S T R I B U T I O N
86
P O L Í T I C A D E I N V E R S I O N E S Y F I N A N C I A M I E N T O D E 2 0 0 4
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
Workers participating in the cable instalation for an electric sub-sation.
87
O T H E R B U S I N E S S E S
CH ILE
SYNAPSIS / C A M /
I N MO BILIARIA M ANSO D E VEL ASCO
ARGENTI NA
SYNAPSIS / C A M
PERU
SYNAPSIS / C A M
BR A ZIL
SYNAPSIS / C A M
CO LOM BIA
SYNAPSIS / C A M
N O M B R E D E L C A P I T U L O
N O M B R E D E L C A P I T U L O
88
Telephone service operators at Synapsis call center in Santiago.
S Y N A P S I S
T H E CO M PA NY
Name:
Synapsis Soluciones
y Servicios IT LTDA.
Kind of company:
Limited partnership
Tax No.:
96,529,420-1
External auditors:
Deloitte & Touche Soc. de Auditores
y Consultores Ltda.
Subscribed and paid capital (ThCh$)
3,943,580
Holding of Enersis (direct and indirect)
100%
Address:
Catedral N° 1284, Piso 10, Santiago.
Investments as proportion of Enersis assets:
0.3%
Telephone:
(56 2) 397 6600
Fax:
(56 2) 397 6601
Web Site:
www.synapsis-it.com
E-mail:
Synapsis@synapsis-it.com
Corporate objects (extract):
Provision and commercialization
of services and equipment relating
to computers, data processing,
telecommunications systems and control
systems for Chilean and foreign public
utility and other companies
REPRESEN TAT IVES A N D
SEN I O R E XECU T IVES
Representative
Cristóbal Sánchez
Alternates
Eduardo López
Claudio Rafael Guzmán
Rodrigo Morelli
Chief Executive Officer
Claudio Rafael Guzmán
Chief Administration & Finance Officer
Rodrigo Morelli
Chief Consultancy Officer
Gustavo Pardo
Chief Operations Officer
Juan S. Seco
Chief Plant Officer
José M. Gil
Chief Commercial Officer
Sergio Sifon
Chief Communications & Marketing Officer
Rodolfo Nieto
Chief Plant Officer, Chile
Pedro Causa
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
89
SYNAPSIS
Synapsis Soluciones y Servicios IT is a professional service
company in information technologies. Synapsis is currently a
Latin American leader in IT solutions for service companies and
governments.
Its head office is in Santiago, Chile and it also has offices in
some of the most important cities in the region for ensuring a broad
coverage: Buenos Aires, Argentina, Río de Janeiro and Fortaleza,
Brazil, Bogotá, Colombia and Lima, Peru.
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The principal areas of action of Synapsis are consultancies
In Brazil, notable was the continued concern for evolution
in the search and implementation of technological solutions
and innovation in business solutions for our customers, for which an
supporting business processes; integration of services and products;
investment of more than US$2 million was approved for a new data
development, implementation and maintenance of information
processing center in the city of Fortaleza. An association was also
systems; outsourcing and infrastructure services, data center,
made with the local telecommunications company, V2 Telecom de
contact center, mass printing; and advice and implementation
San Pablo, for successfully concluding important projects like tele-
of telemetric, telecontrol, safety and localization of vehicles and
metering for large and residential customers for utility companies
telecommunications.
through concentrators, follow-up and localization of vehicles, sending
of short messages to the mobile telephones of the Brazilian electricity
In recent years, Synapsis has enjoyed constant growth in
distribution company customers, etc. Others projects of note are
business from companies un-related to Enersis, these now accounting
the automation of the Coelce substations, the implementation of
for 33% of total revenues.
a human resources system and economic financial system (SAP) in
CAM Brazil.
In Chile in 2004, more than 200 projects were begun, the most
important being the automation of condenser banks for Chilectra;
In Peru, a materials control system was designed for
a new web site and credit card for Chilectra; implementation of the
distributors for improving technical management in works involving
electronic billing system for Chilectra and Smartcom, thus positioning
contractors, with the consequent improvement in productivity; there
Synapsis as one of the most important electronic billing operators in
was innovation in the commercial attention of Edelnor with the
Chile; implementation of control systems for Endesa’s hydroelectric
implementation of a telephone-with-video channel for customers;
plants; implementation of Ingendesa’s documental management
a project was begun for the implementation of the Synergi@
system; call center services, TAG tele-sales for Autopista Central; links
commercial system in Edelnor. With respect to improvements in
project for the Ministry of Education; Heracles and human resources
processes, a quality management system was introduced in the
project for the Instituto de Normalización Previsional; credit and
second half for the services provided to its customers; this obtained
investments system for Codelco.
its ISO 9,001:2000 certification.
O T H E R B U S I N E S S E S
90
In Colombia, there was an increase in business with non-group
This led to the consolidation in Argentina, among other
companies which rose to 45% of revenues. Synapsis Colombia in
activities, of the research and development of strategic products for
2004 was awarded the hosting of SAP applications and outsourcing
the electricity business, technical systems and commercial systems.
of systems and technology for Ecopetrol; the introduction of our
The certification process for the CMMI software development began
commercial solution in Compañía Eléctrica del Norte de Santander
and levels 2 and 3 will be reached in 2005 in order to have a plant
and Biwater Internacional; a contingency program for Codensa’s
with the ability to compete in the international market.
commercial system; renewal of Codensa’s commercial systems
outsourcing contract; and the renewal of the SAP outsourcing contract
Synapsis and its subsidiaries employ 761 highly-trained
for the municipality of Medellín. In the first half of the year, Synapsis
professionals for meeting the demands of our clients and offering a
Colombia ratified its ISO 9,001:2000 certification.
wide variety of services.
The reorganization of the Latin American software plant was
completed in 2004, in terms of the optimization and rationalization
of operations which produced significant increases in efficiency.
INCOM E ST ATE M ENT
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
45,447
(33,363)
(6,084)
6,000
196
4,203
MILL IONS OF CHILEAN P ESOS
20 03
VAR IA TION 03 /04
% CHANGE
46,415
(31,089)
(6,369)
8,956
(299)
6,092
(968)
(2,274)
286
(2,956)
495
(1,889)
(2.1%)
(7.3%)
4.5%
(33.0%)
165.4%
(31.0%)
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
91
C A M
T H E CO M PA NY
Name:
Compañía Americana
de Multiservicios Ltda.
Kind of company:
Limited partnership
Tax No.:
96,543,670-7
External auditors:
Deloitte & Touche Soc. de Auditores
y Consultores Ltda.
Subscribed and paid capital (ThCh$))
2,572,038
Holding of Enersis (direct and indirect)
100%
Address:
Bulnes N° 1238, Santiago.
Investments as proportion of Enersis assets:
0.9%
Telephone:
(56 2) 389 7300
Fax
(56 2) 389 7342
Web Site:
www.camchile.cl
E-mail
cam@cam.enersis.cl
Corporate objects (extract):
Provision directly or through third
parties, in Chile or abroad, of services
in general real estate and property
construction, import, export and
distribution of products of all kinds.
CAM's important participation in Santiago New Metro Stations
AG EN TS A N D SEN I O R
E XECU T IVES
Joint agents
Pantaleón Calvo
Eduardo López
Alternate joint agents
Andreas Gebhardt
Cristóbal Sánchez
Chief Executive Officer
Pantaleón Calvo
Chief Executive Officer, CAM Brazil
Fernando Foix
Chief Executive Officer, CAM Peru
Mario Albornoz
Chief Executive Officer, CAM Colombia
Carlos Restrepo
Legal Representative, CAM Argentina
Mauricio Naser
O T H E R B U S I N E S S E S
92
C A M
In connections and market discipline, contracts were awarded
by the CGE distributor for the constriction of medium and low-tension
CAM directs its activities to providing integral, mass and multi-
junctions and by Compañía Eléctrica del Río Maipo for theft inspection
service solutions, taking advantage of its experience in public utility
services.
services, mainly in operations related to metering, market discipline,
distribution network works and the commercialization and logistics
In metering services, the joint effort of CAM and Chilectra has
of materials and equipment. In recent years, CAM has managed to
enabled it to consolidate the provision of integral services through
position itself strongly in electrical assembly, carrying out various
numerous integrated cell metering installation projects for large
substation and transmission line construction and assembly projects
customers and the installation of metering concentrators in buildings
for the electricity and mining sectors.
in the distribution concession area.
The head office in Chile and its subsidiaries in Argentina, Brazil,
Finally, there was the contract with Compañía Eléctrica del Río
Colombia and Peru have consolidated a regional presence, successfully
Maipo for the maintenance of its park of meters comprising some
expanding their customer portfolio in the electrical, sanitation, gas,
280,000 pieces of equipment.
industrial, mining and telecommunications sectors.
Its commitment to excellence in the quality of service has
the company carried out a large number of works and projects for
enabled CAM to be certified under the ISO standards in almost all
customers in the industrial and mining sectors. It was also awarded
its subsidiaries. This continuous process permits its head office to be
an important turnkey project by the world’s largest mining company,
in full process of being certified.
BHP Billiton, for the construction of a 23 kV distribution system for
In substation engineering, construction and assembly services,
its Spence mine in Chile’s 2nd Region.
During 2004, CAM was awarded contracts for US$161 million
of which 69% came from business with third parties and 31% from
In electrical assembly projects, CAM was awarded 2 contracts
related companies. Of this latter percentage, US$9 million was
by Concesionaria Costanera Norte for the assembly of equipment,
obtained from joint contracts between CAM and Chilectra in projects
transformers and cables in different sections of the highway and the
relating to the transfer of networks and construction of multi-purpose
hanging, ducting and connection of lighting and power cables within
ducts for highway-concession companies.
the tunnel in that section.
In Chile, with respect to market discipline services for public
Within the framework of expansion and modernization of
utility companies, important contracts were signed in 2004 for 2-year
the underground and land transportation system promoted by the
terms with the sanitation companies Esval and Aguas Andinas, and
government, CAM was recently awarded 2 emblematic projects
a 3-year contract with Aguas del Valle.
for Metro S.A. and EFE (Empresa de Ferrocarriles del Estado); in
the first case, for lighting and power systems at 28 stations on its
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
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93
Lines 4 and 4A, and, in the second, for signaling, electrification and
In Argentina, notable was the participation in electrical,
communications for the Santiago-Chillán section of the railway,
sanitation and urban transport sector business, signing contracts for
through a consortium formed by SICE-ENYSE, the latter linked to the
metering equipment maintenance with the Buenos Aires distributors
Spanish ACS-Dragados group.
Edesur and Edelnor for around US$1 million.
In sales of electrical materials, outstanding was the winning
CAM Brazil began work on contracts with Coelce for loss control
of bids with ANDE, Paraguay’s distribution company, for the sale of
management, a 2-year contract amounting to US$6 million, and with
cells, transformers and switches for US$2 million, a supply contract
Ampla for metering and sealing logistics, safety material and control
for the Santiago law courts center for Constructora OHL for close to
of works materials under a 5-year contract worth US$9 million.
US$1 million and materials supply contracts for the country’s largest
distributors amounting to a total of US$2 million.
CAM and its subsidiaries employ 1,496 people.
Among notable business in the regional market, CAM Colombia
stands out for entering the electricity, gas, water, hydrocarbons and
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telecommunications markets and positioning itself as a leader in the
provision of services for public utility companies.
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The Peruvian subsidiary obtained important electrical
construction and assembly contracts with third parties, including
the construction of a transmission line and substation for supplying
energy to Lima’s international airport for approximately US$2 million,
and industrial low-tension assembly work for a significant number
of companies in Lima, for a total of US$1 million.
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INCOM E ST ATE M ENT
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
2 00 4
100,424
(84,077)
(7,113)
9,233
749
8,612
MILL IONS OF CHILEAN P ESOS
20 03
VAR IA TION 03 /04
% CHANGE
94,011
(73,623)
(6,305)
14,083
(295)
11,090
6,413
(10,454)
(808)
(4,850)
1,044
(2,478)
6.8%
(14.2%)
(12.8%)
(34.4%)
354.0%
(22.3%)
O T H E R B U S I N E S S E S
94
ENEA, the large business park that Manso de Velasco is developing in Santiago.
I N M O B I L I A R I A M A N S O D E V E L A S C O
T H E CO M PA NY
AG EN TS A N D SEN I O R
E XECU T IVES
Name:
Inmobiliaria Manso de Velasco Limitada.
External auditors:
Deloitte & Touche
Kind of company:
Limited partnership
Tax No.:
79,913,810-7
Address:
Santa Rosa N° 76, Piso 9, Santiago-
Chile.
Telephone:
(56-2) 3784700
Fax
(56-2) 3784702
E-mail
rch@mvelasco.enersis.cl
Subscribed and paid capital (ThCh$)
25.916.800
Holding of Enersis (direct and indirect)
100%
Investments as proportion of Enersis assets:
1.3%
Corporate objects (extract):
Acquisition, disposal, urbanization,
sub-division, commercialization and
exploitation of all kinds of real estate
and investment company.
Joint Agents
Cristóbal Sánchez
Andrés Salas
Chief Executive Officer
Andrés Salas
Legal Counsel
Alfonso Salgado
Chief Project Development Officer
Gustavo Cardemil
Chief ENEA Project Officer
Bernardo Küpfer
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
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Manso de Velasco focuses its business on the development of
completed new buildings like the residential projects Lomas de
large real estate projects. It made important progress during 2004
Manutara and Santa Beatriz, the buildings of Tonelería Mundial,
in the urbanization and sale of its main project for the ENEA industrial
Fashion Transport, expansion of Safeway, new Copec and Esso gas
sector and projects mainly destined for residential use (Sanctuario
stations and the inauguration of the building of the concession-holder,
del Valle and Puerto Pacífico).
Vespucio Norte express. Total sales for the year reached Ch$6,229
The ENEA project consists of the development of a property
million.
of 1,000 hectares strategically located in western Santiago in its
Also involved is Aguas Santiago Poniente S.A. which provides
Pudahuel district, close to the city’s international airport. The project’s
sanitation services related to the ENEA project. As a result of the
notable highway location and access has been complemented with
important project sales, the company had to expand its infrastructure
the construction in 2004 of the link roads between Avenida Américo
which currently serves more than 2,122 residential and industrial
Vespucio, Avenida San Pablo and the private-concession highway
customers and treats all the project effluents. Aguas Santiago
Costanera Norte which began work in 2004 and should be opened
Poniente is increasing its value significantly, by having the certainty
during 2005. These works will give ENEA excellent connections
of customers related to the ENEA project who require its services.
with the cities strategic centers and thus permit the important
development of this industrial park.
The Santuario del Valle project, located in the La Dehesa
district, has consolidated itself as one of the most important
Phase 1 is currently being developed, corresponding to the
urbanizations in Chile, focused on the sale of one-family residential
industrial and business park. Works continued in 2004 for improving
plots focused on the high-income segments of the population. During
access to the Américo Vespucio axis which will permit the sale of part
2004, the sale of this important urban project was concluded and the
of the land (Phase III-A) located on the west side of Américo Vespucio.
architectural and sanitation service contracts terminated.
The project has an innovative infrastructure including green areas
in order to offer the best facilities and service areas for the complex
In addition, there is the Tapihue project which consists of lands
and its users.
related to the Tapihue, Amancay (plot B) and La Petaca farms. These
together comprise an area of 7,302 hectares in the district of Til-Til in
ENEA continued to make important commercial progress. Large
the province of Chacabuco, Metropolitan Region, and are classified as
companies have installed themselves in the business park including
ZDUC (Conditioned Urban Development Zone) as part of the Santiago
Dibusa, Motorman, Gasei Chile S.A., Empresa Constructora Belfi,
Metropolitan Regulator Plan. Work is currently being carried out on
expansion of Carlos Herrera and the continuation of housing projects
the regularization of the water rights and other requirements which
like Geosal and the expansion of the Santa Beatriz complex phases
will add value to the project.
III and IV. Some companies already forming part of the project have
O T H E R B U S I N E S S E S
96
96
Lastly, there is the Meseta Puerto Pacífico project on land
Manso de Velasco manages a total of 34,160 m2 of office
of more than 35,000m2 located in Viña del Mar which enjoys a
and commercial buildings which are mainly rented to related
privileged position (corner of 15 Norte and Nueva Libertad streets)
companies.
close to important commercial centers and just 5 minutes from Viña
del Mar's downton.
The global sales of Inmobiliaria Manso de Velasco in 2004
During 2004, the sale of sub-plots continued, there remaining
were Ch$10,354 million.
available 44% of the project for sale. To date, 5 real-estate projects
The company employed 29 people at December 31, 2004,
have been developed by third parties on land already sold, of which
comprising 4 executives, 11 professionals and technicians and 14
3 are finished.
staff and others.
INCOM E ST A TEME N T
Sales
Cost of sales
Administrative & selling expenses
Operating income
Non-operating result
Net income
MILL IONS OF CHILEA N P ESO S
2 00 4
20 03
VAR IA TION 03 /04
% CHANGE
10,354
(8,432)
(2,008)
(85)
3,776
3,006
11,616
(10,763)
(1,733)
(880)
(2,127)
1,339
(1,262)
2,331
(275)
795
5,903
1,667
(10.9%)
21.7%
(15.9%)
90.3%
277.5%
124.5%
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
D E C L A R A T I O N O F R E S P O N S I B I L I T Y
97
The directors of Enersis and the chief executive officer, signatories to this declaration, swear to
the truth of all the information contained in this annual report, in accordance with general rule No.30
of the Supreintendency of Securities and insurance.
CHAIRMAN
Pablo Yrarrázaval Valdés
RUT: 5.710.967-K
VICE CHAIRMAN
Rafael Miranda Robredo
RUT: 48.070.966-7
DIRECTOR
Ernesto Silva Bafalluy
RUT: 5.126.588-2
DIRECTOR
Hernán Somerville Senn
RUT: 4.132.185-7
DIRECTOR
Alfonso Arias Cañete
RUT: 48.087.945-7
DIRECTOR
Eugenio Tironi Barrios
RUT: 5.715.860-3
DIRECTOR
José Luis Palomo Álvares
RUT: 48.085.073-4
CHIEF EXECUTIVE OFFICER
Mario Valcarce Durán
RUT: 5.850.972-8
D E C L A R A T I O N O F R E S P O N S I B I L I T Y
98
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
D ISTRILEC I NVERSO R A
Name
Distrilec Inversora S.A.
Kind of company
Foreign closely-held corporation
Address:
San José N° 140 (C1076AAD)
Buenos Aires, Argentina
Telephone:
(54-11) 4370 3700
Fax::
(54-11) 4381 0708
External auditors:
Deloitte & Co. Sr. L.
Subscribed and paid capital (Argentine pesos)
497,612,021,000
Holding of Enersis (direct and indirect)
50.7%
Investments as proportion of Enersis assets:
1.71%
Corporate objects (extract):
Exclusively the investment in companies whose main
business is electricity distribution or that participate
directly or indirectly in companies in that business
through the making of all kinds of financial and
investment activities, the purchase and sale of bonds,
shares, negotiable instruments and the granting of
loans and the placement of cash on banks deposits of
any kind.
BOARD OF DIRECTORS
Chairman
Rafael Juan Fernández
Vice Chairman
Rafael López
Directors
Alan Arntsen
Mariano Florencio Grondona
Marcelo Silva
Gonzalo Vial
Horacio Ricardo Babino
Jorge Gustavo Casagrande
Adelson Antonio da Silva
Luis Miguel Sas
Alternate Directors
Luis Diego Barry
Santiago Daireaux
Manuel María Benites
Roberto José Fagan
Pedro Eugenio Aramburu
Rigoberto Mejía Aravena
Nicolás Carusoni
Martin Aldasoro
Daniel Jorge Maggi
Jorge Roberto Barros
Chief Executive Officer
José María Hidalgo
EN ERSIS I NTERNACI O NAL
Name
Enersis Internacional
Kind of company:
Foreign corporation
Address:
P.O. Box 309, Ugland House, South Church St,
Grand Cayman, Cayman Islands
Telephone:
(345) 949 8066
Fax::
(345) 949 8080
External auditors:
Deloitte & Touche
Subscribed and paid capital (ThCh$)
211,895,795
Holding of Enersis (direct and indirect)
100%
Investments as proportion of Enersis assets
8.2%
Corporate objects (extract):
Any legal activity relating to energy or fuel.
BOARD OF DIRECTORS
Chairman
Mario Valcarce
(Chief Executive Officer of Enersis)
Director
Alfredo Ergas
(Chief Regional Finance Officer of Enersis)
I NVESTLUZ
Name
Investluz S.A.
Kind of company:
Foreign corporation
Tax No.:
03,032,652/0001-04
Address:
Av. Barão de Studart N° 2917, Bairro Dionísio Torres
Fortaleza, Ceará, Brasil.
Telephone:
(55-85) 3216 1273
Fax::
(55-85) 3216 1422
External auditors:
Deloitte & Touche
Total number of shares:
100,461,895,427
Subscribed and paid capital (reals)
954,618,954,270
Holding of Enersis (direct and indirect)
55.5%
Investments as proportion of Enersis assets:
1.16%
Corporate objects (extract):
Participate in the capital of Companhia Enegetica do
Ceará and other companies in Brazil and abroad.
BOARD OF DIRECTORS
The company has no board but is managed by a committee
of managers chaired by Cristián Fierro Montes.
Members of the managers’ committee:
Antonio Osvaldo Teixeira
Silvia Pereira Cunha
José Renato Ferreira Barreto
Luciano Alberto Galasso
Abel Pérez
Manuel Fernando das Neves
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
99
I NVERSI O N ES D ISTRILIM A
EN D ESA M ARKE T PL ACE
Name
Inversiones Distrilima S.A.
Name
Endesa Market Place en Liquidación S.A.
Kind of company:
Foreign corporation
Tax No.:
20217264783
Address:
Jr. Teniente César López Rojas No201, Maranga,
San Miguel, Lima, Perú
Telephone:
(511) 5611604
Fax::
(511) 4523007
PO Box:
32, Lima
External auditors:
Gris y Hernández
y Asociados S.A.C. – Deloitte & Touche
Total number of shares:
487 331 272 acciones
Subscribed and paid capital (million of Peruvian soles)
487,331,272
Holding of Enersis (direct and indirect)
55.7 %
Investments as proportion of Enersis assets:
0.5%
Corporate objects (extract):
Make investments in general especially those related to
electricity distribution and generation.
BOARD OF DIRECTORS
Vice Chairman
Ignacio Blanco
Vicepresidente
Reynaldo Llosa
Alternate Directors
Alfredo Llorente
Cristian Herrera
Fernando Bergasa
Directors
Walter Néstor Sciutto
Mario Enrique Albornoz
Patricia Mascaró
Klaus Winkler
Fernando Fort Marie
Chief Executive Officer
Ignacio Blanco
Kind of company:
Foreign corporation
Address:
Rivera de Loira, 60 CEP 28042
Telephone:
(34-91) 213 1000
Fax::
(34-91) 213 4199
External auditors:
Deloitte & Touche
Subscribed and paid capital (ThCh$)
5,024,427
Holding of Enersis (direct and indirect)
15.0%
Corporate objects (extract):
B2B and new technologies.
Liquidator
Jean Paul Zalaquett
Chief Executive Officer
Jean Paul Zalaquett
ELESU R
Name
Elesur S.A.
Kind of company:
Closely-held corporation
Address:
Santa Rosa 76 Piso 2, Santiago, Chile
Telephone:
(56-2) 353 4680
Fax::
(56-2) 378 4794
External auditors:
Deloitte & Touche
Subscribed and paid capital (ThCh$)
1,044,080,889
Holding of Enersis
100%
Investments as proportion of Enersis assets:
1.6%
Corporate objects (extract):
Make investments in all kinds of assets including trade
paper, shares, corporate rights and participations in
companies.
BOARD OF DIRECTORS
Chairman
Mario Valcarce
(Chief Executive Officer of Enersis)
Directors
Alfredo Ergas
(Chief Regional Finance Officer of Enersis)
Domingo Valdés
(Legal Counsel of Enersis)
Chief Executive Officer
Fernando Isac
(Chief Regional Accounting Officer of Enersis)
LUZ D E RÍO
Name
Luz de Río Limitada
Kind of company:
Limited partnership
Tax No.:
01,171,325/0001-08
Address:
Praça Leoni Ramos, nº 01, bloco 1,
Planta 7 (parte) Niterói, Rio de Janeiro
Telephone:
(55-21) 2613-7032
Fax::
(55-21) 2613-7122
Postal code:
24,210-205
E-mail:
lbettencourt@ampla.com
Securities Register No.:
not applicable
External auditors:
Deloitte Touche Tohmatsu
Total number of partnership shares:
755,000
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
100
Subscribed and paid capital (reals)
755,000
Investments as proportion of Enersis assets:
99.4%
Corporate objects (extract):
Activities related to the electricity sector, especially
its import, transmission, production, distribution,
commercialization and exploration, and participations
in other companies in the electricity sector.
CHILECTR A INTERNACIONAL
Name:
Chilectra Internacional
Kind of company:
Foreign corporation
Address:
P.O. Box 309, Ugland House, South Church St., Grand
Cayman, Cayman Islands, British West Indies.
BOARD OF DIRECTORS
Chairman
Marcelo Llévenes
Chief Financial Officer
Abel Alves Rochinha
Chief Institutional Relations Officer
Eugenio Carbañes
Chief Legal Affairs Officer
Ana Cláudia Gonçalves
COMPAÑ ÍA PERUANA
D E ELEC TRICI DAD
Name
Compañía Peruana de Electricidad S.A.C.
Kind of company:
Closely-held corporation
Tax No.:
20,220,203,663
Address:
Jr. Teniente César López Rojas 201, Maranga,
San Miguel, Lima, Perú
Telephone:
(0511) 5611604
Fax::
(0511) 4523007
PO Box:
32, Lima
External auditors:
Gris y Hernández
y Asociados S.AC. – Deloitte & Touche.
Total number of shares:
121 833 559 acciones
Subscribed and paid capital (million of Peruvian soles)
121,833,559
Holding of Enersis (direct and indirect)
51.0%
Corporate objects (extract):
Investments in general especially related to electricity
distribution and generation.
The company has no board of directors.
Chief Executive Officer
Ignacio Blanco
Corporate objects (extract):
Exploitation, production, transport, distribution and
trading of energy and electrical equipment, and the
making of electrical installations.
Chief Executive Officer
Christian Mosqueira
EMPRESA ELÉC TRIC A
DE CO LINA
Name
Empresa Eléctrica de Colina Limitada
Kind of company:
Limited partnership
Address:
Chacabuco N°31, Colina, Santiago, Chile
Telephone:
(562) 844-3130
Fax:
(562) 844-3111
External auditors:
KPMG Auditores Consultores Ltda.
Telephone:
(345) 949-8066
Fax::
(345) 949-8080
External auditors:
KPMG Auditores Consultores Ltda.
Authorized capital (US dollars)
112,022,703
Paid Capital (US dollars)
112,022,703
Holding of Enersis (direct and indirect)
98.2%
Corporate objects (extract):
Activities related to projects and investments
of the parent company.
Paid Capital (ThCh$)
64,672
Chairman
Mario Valcarce
(Chief Executive Officer of Enersis)
Director
Alfredo Ergas
(Chief Financial Officer of Enersis)
LUZ AN DES
Name
Luz Andes Limitada
Kind of company:
Limited partnership
Address:
Santa Rosa 76 Piso 5, Santiago, Chile
Telephone:
(562) 634-6310
Fax::
(562) 634-6370
External auditors:
KPMG Auditores Consultores Ltda.
Paid Capital (ThCh$)
1,000
Holding of Enersis (direct and indirect)
98.2%
Holding of Enersis (direct and indirect)
98.2%
Corporate objects (extract):
Exploitation, production, transport, distribution and
trading of energy and electrical equipment, and the
making of electrical installations.
Chief Executive Officer
Leonel Martínez
CH ILEC TR A I NVERSU D
Name
Chilectra Inversud S.A.
Kind of company:
Closely-held corporation
Address:
Santa Rosa 76, piso 8°, Santiago
Telephone:
675-2000
Fax:
675-2000
External auditors:
KPMG Auditores Consultores Ltda.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
101
SYNAPSIS PERÚ
Name
Synapsis del Perú S.A.
Kind of company:
Corporation
Tax No.:
20466590747
Address:
Jr. Teniente César López Rojas 201, Piso 10, Maranga,
San Miguel, Lima, Perú
Telephone:
(0511) 5611604
Fax:
(0511) 4523007
Securities Register No.:
Not applicable
External auditors:
Gris y Hernández y Asociados S.AC. – Deloitte & Touche.
Total number of shares:
609,200
Subscribed and Paid Capital (Peruvian soles)
609,200
Holding of Enersis (direct and indirect)
100%
Corporate objects (extract):
Provide services related to computing, data processing
and other IT services in telecommunications and
control, and of training in activities related to the
above.
The corporation has no board of directors
Chief Executive Officer
Patricia Mascaró
SYNAPSIS ARGENTI NA
Name
Synapsis Argentina
Kind of company:
Limited partnership
RUT (CUIT)
30-65753556-3
Address:
Alicia Moreau de Justo 1750 3 “C”, Capital Federal
Telephone:
0054 11 4021 8300
Fax:
0054 11 4021 8300
Paid Capital (US$)
230,120,000
Holding of Enersis (direct and indirect)
98.2%
Corporate objects (extract):
Exploitation abroad and the distribution and sale
of electricity, and making of investments in foreign
companies and all kinds of investments in any
commercial instrument including bonds, debentures,
credits, negotiable securities or other financial or
commercial documents.
Chief Executive Officer
Álvaro Pérez
Manager Administration & Human Resources
Edgar Enrique Martínez
Commercial Manager
Germán Sánchez
Consultancy Manager
Leonardo Fabio Escobar
Plant Manager
Ana Patricia Delgado
Operations Manager
Eduardo Ruiz
BOARD OF DIRECTORS
Chairman
Marcelo Silva
Vice Chairman
Cristóbal Sánchez
Director
Rafael López
Chief Executive Officer
Juan Pablo Spoerer
SYNAPSIS CO LOM BIA
Name
Synapsis Colombia Limitada
Kind of company:
Limited partnership
RUT
830,054,730-1
SYNAPSIS BR ASIL
Name
Synapsis Brasil Limitada
Kind of company:
Limited partnership
Tax No.:
01,855,536/0001-51
Address:
Av. Rio Branco, 01 – Sala 508 – Centro – RJ Cep:
20090-003
Telephone:
(55 21) 2550-8590 until 8595
Fax:
(56-2) 2550-8590 until 8595 (anexo 204)
External auditors:
Deloitte Touche Tohmatsu
Address:
Carrera 13 A No. 93-66 Piso 6° Bogotá, D.C.
Subscribed and Paid Capital (reals)
390,334
Telephone:
(57-1) 601 5800
Fax:
(57-1) 601 5915
External auditors:
Deloitte Colombia Ltda.
Subscribed and Paid Capital (Colombian pesos)
238,446,000
Holding of Enersis (direct and indirect)
100%
Corporate objects (extract):
Supply and commercialization of services and
equipment related to computing and data processing to
Chilean or foreign public utility and other companies
ADMINISTRATION
Chairman
Claudio Rafael Guzmán
Holding of Enersis (direct and indirect)
100%
Corporate objects (extract):
Provision of consultancy and technical assistance in
the computing and data processing area to Brazilian or
foreign companies; The development of information
technology programs and systems; the sale of IT
and data processing equipment; the manufacture,
purchase, sale, import, export, representation,
consignment and distribution of all kinds of assets
connected with the above objects; and participations
in other companies that operate in the above sector or
in electricity
BOARD OF DIRECTORS
Chairman
Leonardo Miguel Covalschi
Directors
Antonio Jaime Bravo
Carlos Alberto Acero
Senior executives
Chief Executive Officer
Leonardo Miguel Covalschi
Legal Counsel
Manager Administration & Finance
Jacqueline Gomes
Manager Human Resources
Marcia Caporazzo
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
102
Securities Register No.:
Inscribed with the Justice authority on November 10,
1992. The transformation to a limited partnership was
inscribed with the same authority on September 3,
2002.
Corporate objects (extract):
Provide professional and technical services in the
purchase and sale of materials or equipment for
electricity, water, gas or communications services.
C A M BR ASIL
Name
Cam Brasil Multiserviços Limitada
External auditors:
Deloitte & Co SRL
Total number of shares: (cuotas)
466,129
Subscribed and Paid Capital (Argentine pesos)
466,129
Holding of Enersis (direct and indirect)
100%
Corporation with no board of directors
Chief Executive Officer
Mario Albornoz
C A M CO LOM BIA
Name
Compañía Americana de Multiservicios Limitada
Colombia
Corporate objects (extract):
Provide services related to computing, data processing
and other IT services in telecommunications and
control, and of training in activities related to the
above.
Kind of company:
Limited partnership
Tax No.:
830,058,272-8
Management
Managers
Claudio Rafael Guzmán
José María Gil
Javier Sampayo
Alternate Manager
Mariano Florencio Grondona
Address:
AV. Carrera 68 No. 5-21, Bogotá, Colombia
Telephone:
(57-1) 4173000
Fax:
(57-1) 5651012
Senior Executives
Chief Executive Officer
José María Gil
Chief Administration, Finance & Human Resources Officer
Javier Sampayo
External auditors:
Deloitte & Touche Ltda.
Total number of shares:
1,615,500
C A M PERÚ
Name
Compañía Americana de Multiservicios del Perú S. A.
Kind of company:
Corporation
Tax No.:
20,388,101,971
Address:
Jr. Teniente César López Rojas 201, Piso 3, Maranga,
San Miguel, Lima, Perú
Telephone:
(0511) 5611604
Fax:
(0511) 4523007
External auditors:
Gris y Hernández y Asociados S.AC. – Deloitte & Touche.
Total number of shares:
1,320,610
Subscribed and Paid Capital (Peruvian soles)
1,320,610
Holding of Enersis (direct and indirect)
100%
Subscribed and Paid Capital (Th$)
1,615,500,000
Holding of Enersis (direct and indirect)
100%
Corporate objects (extract):
Provide professional and technical services in the
purchase and sale of materials or equipment for
electricity, water, gas or communications services.
BOARD OF DIRECTORS:
CAM COLOMBIA
Composición Accionaria 99.9999%
Represented by Sr. Pantaleon Calvo.
SYNAPSIS
Composición Accionaria 0.0001%
Represented by Sr. Alvaro Pérez
SENIOR EXECUTIVES
Chief Executive Officer
Carlos Mario Restrepo
Legal Counsel
(Servicio Externo prestado por Codensa)
Chief Commercial Officer
Javier Valdez
Chief Procurement & Logistics Officer
Américo Mikly
Chief Operations Officer
Juan Camilo Vargas
Chief Metering Systems Officer
Alexander Mossos
Projects Director
Fabio Gómez
Head of Planning & Control
Mauricio Salinas
Head of Administration & Human Resources
Claudia Durán
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
Kind of company:
Limited partnership
Tax No.:
04,214,233/0001-48
Address:
Av José Mendonça de Campos, 680
São Gonçalo - RJ
Telephone:
(55-21) 2717-2222
Fax:
(55-21) 2702-8000
PO Box:
24,470-700
External auditors:
Deloitte Touche Tohmatsu.
Subscribed and Paid Capital (Th$)
252,216
Holding of Enersis (direct and indirect)
100%
Corporate objects (extract):
Provision of electrical engineering services,
construction of networks and large works, mass
commercial services in utilities.
SENIOR EXECUTIVES
Chief Executive Officer
Fernando Foix
Chief Commercial Officer
Pablo Edmundo Calderon
Chief Administration & Resources Officer
Francisco Loza
Chief Finance, Planning & Control Officer
Antonio José Nóboa
Chief Commercial Processes Officer
Iván Castillo
Chief Losses Services Officer
Jorge Vergara
Chief Metering Services Officer
Santiago Contreras
Manager, Fortaleza subsidiary
Marco Laforet
C A M ARGENTI NA
Name
Compañía Americana de Multiservicios
(CAM) S.R.L.
Kind of company:
Limited partnership
Tax No.:
30-66188247-2
Address:
Av. Vélez Sarsfield 1160, Capital Federal, Argentina
103
Telephone:
0054 11 4302 2951/58
Fax:
0054 11 4302 2951/58
Corporate objects (extract):
The construction of all kinds of civil works, installations,
buildings, housing, offices, etc; the sale and disposal of
such works and buildings; the study & development of
such projects.
AGUAS SANTIAG O
P O N IENTE
Inscription in Securities Register:
Inscribed with the Justice authority on September
27, 1993 (No.9274). Its transformation to a limited
partnership was inscribed with the same authority on
January 7, 2003 (No.166).
Number of partnership rights:
The capital is $1,000,000 divided into 1,000,000
rights.
Subscribed and paid capital:
The capital is fully paid up.
Participación de Enersis (directa e indirecta)
99.90%
Corporate objects (extract):
The provision of professional and technical services to
entities in consultancy, technical assistance, assembly,
process control, start up and maintenance of systems,
machinery and apparatus, maintenance of transport
and distribution networks, all related to electricity.
Manager
Mauricio Naser
Alternate Manager
Marcelo Luis Rull
CO NSTRUCCI O N ES
Y PROYEC TOS LOS M AITEN ES
Name
Construcciones y Proyectos Los Maitenes S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,764,840-K
Address:
Américo Vespucio 0100, Pudahuel, Santiago
Telephone:
6010601
Fax:
6010519
External auditors:
Deloitte & Touche
Total number of shares:
295,100
Subscribed and Paid Capital (Th$)
3,809,503
Holding of Enersis (direct and indirect)
55%
BOARD OF DIRECTORS
Chairman
Cristóbal Sánchez
Directors
Manuel Jarpa
Andrés Salas
Luis Felipe Edwards
Patricio Parodi
Chief Executive Officer
Bernardo Küpfer
Name
Aguas Santiago Poniente S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,773,290-7
Address:
Américo Vespucio No0100, Pudahuel, Santiago
AGRÍCO L A E I N MO BILIARIA
PASTOS VERD ES
Telephone:
6010601
Fax:
6010519
Name
Agrícola e Inmobiliaria Pastos Verdes Limitada
External auditors:
Deloitte & Touche
Kind of company:
Limited partnership
Tax No.:
78,970,360-4
Address:
Santa Rosa 76, Santiago
Telephone:
6010601
Fax:
6010519
Securities Register No.:
Not applicable
External auditors:
Deloitte & Touche
Subscribed and Paid Capital (Th$)
37,029,390
Holding of Enersis (direct and indirect)
55%
Corporate objects (extract):
The exploitation of farm land and the development of
real estate activities.
Acciones
1,876,271
Subscribed and Paid Capital (Th$)
3,075,927
Holding of Enersis (direct and indirect)
55%
Corporate objects (extract):
Exclusively to establish, construct and exploit public
utilities for the production and distribution of drinking
water; collect, treat and dispose of waste waters and
perform the other functions required by law.
BOARD OF DIRECTORS
Chairman
Víctor Manuel Jarpa
Directors
Cristóbal Sánchez
Andrés Salas
Luis Felipe Edwards
Patricio Parodi
Chief Executive Officer
Jorge Alé
AGRÍCO L A D E C A MEROS
ADMINISTRATION
Complete with the presence of 3 representatives
together.
Name
Sociedad Agrícola de Cameros
Chief Executive Officer
Bernardo Küpfer
Kind of company:
Limited partnership
Tax No.:
77,047,280-6
Address:
Camino Polpaico a Til-Til, S/N Til-Til.
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
104
Telephone:
3784700
Fax:
3784702
External auditors:
Deloitte & Touche
Subscribed and Paid Capital (Th$)
5,738,046
Holding of Enersis (direct and indirect)
57.5%
Corporate objects (extract):
The exploitation of farm land.
Senior Executives
Chief Executive Officer
Miguel Ortiz
Chief Administration & Finance Officer
Gabriel Cerda
Chief Human Resources Manager
Rigoberto Allendes
Chief Performance Control Officer
Jorge Burlando
Chief Commercial Manager
Sergio Schmois
Chief Production Manager
Francisco Monteleone
CH O CÓ N
ADMINISTRATION
Complete with the presence of 3 representatives
together.
Name
Hidroeléctrica El Chocón S.A.
Chief Executive Officer
Hugo Ayala
COSTAN ER A
Name
Central Costanera S.A.
Kind of company:
Corporation
Address:
Av. España 3301, Buenos Aires, Argentina.
Corporate objects (extract):
The production of electricity and its sale in blocks.
Paid capital (ThCh$):
90,299,357
Holding of Enersis (direct and indirect)
38.5%
Directors
Chairman
Héctor López
Vice Chairman
Máximo Bomchil
Julio Valbuena
Rafael Mateo
José María Hidalgo
Roberto Fagan
César Amuchástegui
Pablo Piñera
Eduardo J. Romero
Alternate Directors
Carlos Martín Vergara
María Soledad Martínez
Jorge Burlando
Sergio Schmois
José Miguel Granged
Gabriel Cerdá
Bernardo Iriberri
Alfredo Mauricio Vítolo
Sebastián Piñera
Kind of company::
Corporation
Address:
Av. España 3301, Buenos Aires; Argentina.
Corporate objects (extract):
The production of electricity and its sale.
Paid capital (ThCh$):
188,522,713
Holding of Enersis (direct and indirect)
28.5%
Vice Chairman
Francisco Mezzadri
Antonio Cámara
Miguel Ortiz
Julio Valbuena
Eduardo Adrián Carbajo
José Luis Mazzone
Javier Zuber
Alternate Directors
Fernando Antognazza
Francisco Domingo Monteleone
José María Hidalgo
José Miguel Granged
Susana Alcira Arévalo
Enrique Díaz
Carlos Arturo Principi
Rubén Paramidani
Chief Executive Officer
Fernando Claudio Antognazza
EN D ESA ARGENTI NA
Name
Endesa Argentina S.A.
Kind of company:
Corporation
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
Address:
Suipacha 268, piso 12, Buenos Aires, Argentina.
Corporate objects (extract):
Investments in companies producing, transporting and
distributing electricity and its sale, and other financial
investments.
Paid capital (ThCh$):
22,980,791
Holding of Enersis (direct and indirect)
60.0%
Directors
Chairman
José Miguel Granged
Vice Chairman
Néstor José Belgrano
Director
Francisco Martín
Alternate Directors
José María Hidalgo
Patricio Alberto Martín
Marcelo A. Den Toom
H I D RO I NVEST
Name
Hidroinvest S.A.
Kind of company:
Corporation
Address:
Av. España 3301, Buenos Aires; Argentina.
Corporate objects (extract):
Acquire and maintain a majority holding in
Hidroeléctrica El Chocón S.A.
Paid capital (ThCh$):
10,149,225
Holding of Enersis (direct and indirect)
41.9%
BOARD OF DIRECTORS
Chairman
Héctor López
Vice Chairman
Francisco Mezzadri
Directors
Héctor López
Antonio Cámara
Fernando Claudio Antognazza
Julio Valbuena
Francisco Domingo Monteleone
Carlos Principi
105
Alternate Directors
Viviana Soria
Daniel Garrido
José Miguel Granged
José María Hidalgo
Roberto Fagan
Gabriel Cerdá
Rigoberto Allendes
Sergio Falzone
C ACH O EIR A D O U R ADA
Name
Centrais Elétricas Cachoeira Dourada S.A.
Kind of company:
Open corporation
Address:
Av.República del Líbano 2,417, Oficina Nº702,
Ed. Paladium Center Goiania,
Goiás - 74,115,030 – Brasil.
Corporate objects (extract):
The planning, construction, installation, operation and
exploitation of electricity generating plants and related
activities.
Paid capital (ThCh$):
144,462,473
Holding of Enersis (direct and indirect)
55.5%
BOARD OF DIRECTORS
Chairman
Francisco Javier Bugallo
Directors
Nicolás Pérez
Raimundo Cámara
SENIOR EXECUTIVES
Chief Executive Officer
Francisco Bugallo
Chief Commercial officer
Manuel Herrera
Chief Trading Officer
Juan Pablo Herrera
EN D ESA BR ASIL
Name
Endesa Brasil Participacoes Ltda.
Kind of company:
Limited partnership
Address:
Praia de Botafogo 228, Oficina Nº1.105, Río de Janeiro,
R.j. 22 359-900 - Brasil.
Corporate objects (extract):
Investments in companies and the provision of services
related to the electricity sector generating plants and
related activities, and the detection and study of new
markets and alternative investments, especially in
electricity.
Paid capital (ThCh$):
161,921,504
Holding of Enersis (direct and indirect)
55.6%
Paid capital (ThCh$):
673,566
Holding of Enersis (direct and indirect)
60.0%
Representatives
Francisco Javier Bugallo
Manuel Herrera
I N GEN D ESA BR ASIL
Razón social
Ingendesa do Brasil Ltda.
BOARD OF DIRECTORS
Chairman
Claudio Iglesis
Vice Chairman
Alan Fischer
Directors
Leonardo Contreras
Enrique Lozán
Alejandro Wendling
Osvaldo Muñoz
Pedro Gatica
Chief Executive Officer
Lucio Castro Márquez
Kind of company:
Sociedad de responsabilidad limitada
PAN GU E
Address:
Rua Uruguaiana N° 94, Pavimento 05, Centro - Río de
Janeiro, Rj - Cep 20,050 - 090, Brasil.
Name
Empresa Eléctrica Pangue S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,589,170-6.
Address:
Santa Rosa 76, Santiago, Chile.
Corporate objects (extract):
The generation, transport, distribution and provision
of electricity, and the acquisition of concessions for this
purpose.
Paid capital (ThCh$):
73,590,496
Holding of Enersis (direct and indirect)
57.0%
BOARD OF DIRECTORS
Chairman
Claudio Iglesis
Vice Chairman
Alan Fischer
Director
Alejandro Wendling
Chief Executive Officer
Lionel Roa
Corporate objects (extract):
Provision of engineering, studies, projects, technical
consultancy, works management and supervision,
inspection and reception of material and equipment,
and laboratory services.
Paid capital (ThCh$):
117,570
Holding of Enersis (direct and indirect)
58.6%
Representative
Chief Executive Officer
Sergio Campos
PEH U ENCHE
Name
Empresa Eléctrica Pehuenche S.A.
Kind of company:
Open corporation
Tax No.:
96,504,980-0
Address:
Santa Rosa 76, Santiago, Chile
Corporate objects (extract):
The generation, transport, distribution and provision
of electricity, and the acquisition of concessions for this
purpose.
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
106
CELTA
Paid capital (ThCh$):
31,529,181
I N GEN D ESA
Name
Compañía Eléctrica Tarapacá S.A.
Holding of Enersis (direct and indirect)
44.5%
Name
Empresa de ingeniería Ingendesa S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,770,940-9.
Address:
Santa Rosa 76, Santiago, Chile.
Corporate objects (extract):
The principal objective of this coorporation is the
production, transportation and distribution of national
and international energy supply. For this purpose
it shall obtain the corresponding concession rights.
Furtheremore, among some of it’s more important
goals are the construction of a thermoelectric
generation plant and the construction and operation
of a pier suitable for the loading and unloading of
raw materials and other products of the patache
sector (first region). It will also being in charge of the
construction of a transmision and sub-stations between
the before mentioned thermoelectric generation plant
and the Doña Inés de Collahuasi copper mine. This will
also help in the reinforcement of the SING.
Paid capital (ThCh$):
83,337,314
Holding of Enersis (direct and indirect)
60.0%
BOARD OF DIRECTORS
Chairman
Alejandro Wendling
Directors
Alan Fischer Hill
Rodrigo Naranjo
Chief Executive Officer
Eduardo Soto
SAN ISI D RO
Name
Compañía Eléctrica San Isidro S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,783,220-0.
Address:
Santa Rosa 76, Santiago, Chile.
Corporate objects (extract):
The generation, transport, distribution and provision
of electricity.
DIRECTORS
Chairman
Alejandro Wendling
Vice Chairman
Javier García
Claudio Iglesis
Alan Fischer
Pedro Gatica
Alternate directors
Alejandro García
Joseph Lessard
Rodrigo Naranjo
Osvaldo Muñoz
Claudio Betti
Chief Executive Officer
Claudio Iglesis
I NVERSI O N ES ELÉC TRIC AS
Q U ILLOTA
Name
Inversiones Eléctricas Quillota S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,827,970-k
Address:
Santa Rosa 76, Santiago, Chile
Kind of company:
Closely-held corporation
Tax No.:
96,588,800-4
Address:
Santa Rosa 76, Santiago, Chile
Corporate objects (extract):
The provision of engineering, works inspection,
inspection and reception of materials and equipment,
and laboratory services in different fields and in
general consultancy services in all fields.
Paid capital (ThCh$):
1,926,614
Holding of Enersis (direct and indirect)
58.6%
BOARD OF DIRECTORS:
Chairman:
Rafael Mateo
Rafael de Cea
Santiago Sabugal
Chief Executive Officer:
Juan Benabarre
TÚ N EL EL MELÓ N
Name
Sociedad Concesionaria Túnel El Melón S.A.
Corporate objects (extract):
Invest in Compañía Eléctrica San Isidry S.A. or the entity
legally succeeding it.
Kind of company:
Closely-held corporation
Paid capital (ThCh$):
15,687,240
Holding of Enersis (direct and indirect)
30.0%
DIRECTORS
Chairman
Alejandro Wendling
Javier García Burgos
Claudio Iglesis
Alternate directors
Alan Fischer
Joseph Lessard
Rodrigo Naranjo
Chief Executive Officer
Claudio Iglesis
Tax No.:
96,671,360-7
Address:
Santa Rosa 76, Santiago, Chile
Corporate objects (extract):
Construction and exploitation of the public El Melon
highway tunnel.
Paid capital (ThCh$):
8,932,247
Holding of Enersis (direct and indirect)
60.0%
BOARD OF DIRECTORS:
Chairman:
Alejandro González
Jorge Ale
Renato Fernández
Chief Executive Officer:
Maximiliano Ruiz
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
107
EN I GESA
Name
Endesa Inversiones Generales S.A.
Kind of company:
Sociedad Anónima Cerrada
Tax No.:
96,526,450-7
Address:
Santa Rosa 76, Santiago, Chile
Corporate objects (extract):
The provision of engineering, works inspection,
inspection and reception of materials and equipment,
and laboratory services in different fields and in
general consultancy services in all fields.
Paid capital (ThCh$):
2,470,089
Holding of Enersis (direct and indirect)
60.0%
BOARD OF DIRECTORS
Alejandro González
Juan Carlos Mundaca
Jaime Montero
Chief Executive Officer:
Juan Carlos Mundaca Álvarez
I NVERSI O N ES EN D ESA N O RTE
Name
Inversiones Endesa Norte S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,887,060-2
Address:
Santa Rosa 76, Santiago, Chile
Corporate objects (extract):
Investments in energy projects in the north of Chile
related to Gasoducto Atacama Compañía Limitada,
Gasoducto Cuenca Noroeste Ltda. and Noroeste Pacífico
Generación de Energía Ltda and Administradora
Proyecto Atacama S.A.
Paid capital (ThCh$):
74,827,340
Holding of Enersis (direct and indirect)
60.0%
BOARD OF DIRECTORS
Chairman:
Alejandro González
Manuel Irarrázaval
Rafael Mateo
Alternate Directors
Juan Benabarre
Raúl Arteaga
Chief Executive Officer:
Juan Benabarre
EMGESA
Name
Emgesa S.A. E.S.P.
Kind of company:
Public utility corporation
Address:
Carrera 11 Nº 82-76, Piso 3 Santa Fe de Bogotá, D.C.
Colombia.
Corporate objects (extract):
The generation and sale of electricity and related
activities
Paid capital (ThCh$):
700,273,325
Holding of Enersis (direct and indirect)
12.7%
BOARD OF DIRECTORS
Chairman:
Andrés Regué
Rafael Errázuriz
Alejandro González
Alejandro Zaccour
José Antonio Vargas
Enrique Borda
Pedro Arturo Rodríguez
Camilo Sandoval
Juan Rincón
Alternate Directors
Gustavo López
Lucio Rubio
Carlos Alberto Luna
Martha Veleño
Fernando Gutiérrez
Alvaro José Cruz
Henry Navarro
Héctor Zambrano
Manuel Jiménez
Senior Executives
Chief Executive Officer:
Lucio Rubio
Chief Administration & Finance Officer
Gustavo López
Chief Performance Control Officer
Luis Larumbe
Chief Operations Officer
Carlos Alberto Luna
Chief Commercial Officer
Fernando Gutiérrez
BE TAN IA
Name
Central Hidroeléctrica de Betania S.A. E.S.P.
Kind of company:
Public utility corporation
Address:
Carrera 5 Nº 6-28, Edificio Metropolitano, Torre B, Piso
5º, Neiva, Colombia.
Corporate objects (extract):
The generation and sale of electricity
Paid capital (ThCh$):
392,608,034
Holding of Enersis (direct and indirect)
51.4%
BOARD OF DIRECTORS
Chairman:
Lucio Rubio
Alejandro Zaccour
Alejandro González
Rafael Errázuriz
Mario Scarpetta
Alternate Directors
Andrés Regué
Luis Humberto Ustariz
Fernando Gutiérrez
Alvaro José Cruz
Carlos Alberto Luna
Chief Executive Officer:
Carlos Alberto Luna
C APITAL EN ERGÍA
Name
Capital Energía S.A.
Kind of company:
Commercial corporation
Address:
Santafé de Bogotá, D.C. Colombia
Corporate objects (extract):
Investment in Empresa de Energía Eléctrica de
Bogotá S.A.E.S.P. and in other electricity generating,
distribution and transmission companies.
Paid capital (ThCh$):
415,714,494
Holding of Enersis (direct and indirect)
26.2%
Directors
Andrés Regué
Rafael Errázuriz
Lucio Rubio
Alejandro González
Alvaro José Cruz
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
108
Alternate Directors
Fernando Gutiérrez
Carlos Alberto Luna
Gustavo López
Juan Manuel Pardo
Isabel Cristina Solano
Chief Executive Officer:
Lucio Rubio
ED EGEL
Name
Edegel S.A.A.
Kind of company:
Corporation
Address:
Av. Víctor Andrés Belaúnde N° 147 Vía Principal N° 102
Centro Empresarial Camino Real , San Isidro, Lima,
Perú.
Corporate objects (extract):
Electricity generation.
Paid capital (ThCh$):
463,747,210
Holding of Enersis (direct and indirect)
22.7%
Directors
Chairman:
Héctor López
Vice Chairman
Javier García Burgos
Juan Benabarre
Fritz Du Bois
José María Hidalgo
Ricardo Harten
Alfonso Bustamante
Alternate Directors
José Graña
Edwin Vásquez
Francisco García
Roberto Cornejo
Milagros Noriega
Jaime Zavala
Joseph Lessard
Senior Executives
Chief Executive Officer:
José Griso
Chief Legal Counsel
Joanna Zegarra
Chief Financial Officer
Milagros Noriega
Chief Operations Officer
Julián Cabello
Chief Commercial Officer
Robert Cornejo
GEN ER AN D ES PERÚ
Name
Generandes Perú S.A.
Kind of company:
Corporation
Address:
Av. Víctor Andrés Belaúnde N°147, Torre Real, San
Isidro, Lima, Perú.
Corporate objects (extract):
Business relating to electricity generation, directly or
through other companies.
Paid capital (ThCh$):
198,987,190
Holding of Enersis (direct and indirect)
35.8%
Directors
Chairman:
Héctor López
Vice Chairman
Javier García Burgos
José Griso
Juan Benabarre
José María Hidalgo
Mario Valcarce
(Chief Executive Officer: Enersis S.A.)
Joseph Lessard
Fritz Du Bois
Alternate Directors
Edwin Vásquez
Juan Antonio Rozas
César Montero
Julio Lemaitre
Steve Pearlman
Milagros Noriega
Roberto Cornejo
Guillermo Lozada
Chief Executive Officer:
José Griso
Chief Executive Officer
Milagros Noriega
CO N O SU R
Name
Compañía Eléctrica Cono Sur S.A.
Kind of company:
Corporation
Address:
Edificio Omega. Av. Samuel Lewis y Calle 53, Apartado
Postal 4493, Panamá 5, República de Panamá.
Corporate objects (extract):
To carry out any kind of business; generate, transmit,
supply and distribute electricity generation; acquire
and sell shares, securities and assets in general.
Paid capital (ThCh$):
924,324,645
Holding of Enersis (direct and indirect)
60.0%
Directors
Chairman:
Alejandro González
Manuel Irarrázaval
Alfredo Ergas
(Chief Regional Finance Officer of Enersis)
Carlos Martin Vergara
L A JAS I NVERSO R A
Name
Lajas Inversora S.A.
Kind of company:
Corporation
Address:
Edificio Omega. Av. Samuel Lewis y Calle 53, Apartado
Postal 4493, Panamá 5, República de Panamá.
Corporate objects (extract):
To carry out any kind of business; generate, transmit,
supply and distribute electricity generation; acquire
and sell shares, securities and assets in general.
Change of name
The change of name from Lajas Holdings Inc. to Lajas
Inversiones S.A. was approved by an extraordinary
shareholders’ meeting held on August 16, 2001.
Paid capital (ThCh$):
406,584,648
Holding of Enersis (direct and indirect)
55.7%
Directores
Chairman:
Carlos Martín Vergara
Treasurer
Alejandro González
Alfredo Ergas
(Chief Regional Finance Officer of Enersis)
Manuel Irarrázaval
José Griso
Chief Executive Officer:
Francisco Javier Bugallo
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
109
Alternate Directors
Juan Carlos Blanco
Roberto José Fagan
Daniel Garrido
Chief Executive Officer:
Roberto José Fagan
C TM
Name
Compañía de Transmisión del Mercosur S.A.
Kind of company:
Corporation
Directors
Chairman:
José María Hidalgo
Francisco Javier Bugallo
José Agustín Venegas
Alternate Directors
Arturo Papalardo
Juan Carlos Blanco
Roberto José Fagan
Chief Executive Officer:
Francisco Javier Bugallo
GASO D UC TO ATAC A M A
Address:
Bartolomé Mitre 797, Piso 13, Buenos Aires, Argentina.
ARGENTI NA
EN D ESA CH ILE
I NTERNACI O NAL
Name
Endesa Chile Internacional
Kind of company:
Corporation
Address:
Caledonian Bank & Trust Limited, Caledonian House,
Mary Street P.o. Box 1043, George Town, Grand
Cayman, Cayman Islands.
Corporate objects (extract):
To carry out any kinds of business as permitted by the
law of the Cayman Islands.
Change of Name:
The change of name from Endesa Chile Overseas Co.
to Endesa Chile Internacional was approved by an
extraordinary shareholders’ meeting held on August
16, 2001.
Paid capital (ThCh$):
483,372,831
Holding of Enersis (direct and indirect)
60.0%
DIRECTORS
Alejandro González
Carlos Martín Vergara
Manuel Irarrázaval
Alfredo Ergas
(Chief Regional Finance Officer of Enersis)
CEMSA
Corporate objects (extract):
The provision of high-tension electricity transportation
services.
Paid capital (ThCh$):
7,901,702
Holding of Enersis (direct and indirect)
27.0%
Directors
Chairman:
José María Hidalgo
Francisco Javier Bugallo
José Agustín Venegas
Alternate Directors
Arturo Papalardo
Juan Carlos Blanco
Roberto José Fagan
Name
Comercializadora de Energía del Mercosur S.A.
Chief Executive Officer:
Francisco Javier Bugallo
Kind of company:
Corporation
Address:
Avenida España 3301, Sector B, Buenos Aires,
Argentina.
Corporate objects (extract):
Wholesale trading of electricity including its import and
export and the provision of related services.
Paid capital (ThCh$):
7,810,289
Holding of Enersis (direct and indirect)
27.0%
Directors
Chairman:
José María Hidalgo
Vice Chairman
José Agustín Venegas
Francisco Javier Bugallo
TESA
Name
Transportadora de Energía S.A.
Kind of company:
Corporation
Address:
Bartolomé Mitre N° 797, Piso 13, Oficina 79, Buenos
Aires, República Argentina.
Corporate objects (extract):
The provision of high-tension electricity transportation
services.
Paid capital (ThCh$):
8,367,689
Holding of Enersis (direct and indirect)
27.0%
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
Name
Gasoducto Atacama Argentina S.A.
Kind of company:
Closely-held corporation
Tax No.:
78,952,429-3
Address:
Isidora Goyenechea 3365, Santiago, Chile.
Corporate objects (extract):
The transportation of natural gas in Chile and abroad
including the construction, location and exploitation
of gas pipelines and related activities. The company
formed an agency in Argentina called Gasoducto
Cuenca Noroeste Limitada, Argentina Branch, for
building the pipeline between Cornejo in Salta province
and the Chilean border.
Paid capital (ThCh$):
58,821,686
Holding of Enersis (direct and indirect)
30.0%
Directors
Chairman:
Rafael Mateo
Alejandro González
Tom Miller
Francisco Mezzadri
Alternate Directors
Juan Benabarre
Rafael de Cea
David Kehoe
David Baughman
Chief Executive Officer:
Rudolf Araneda
110
CIEN
Name
Compañía de Interconexión Energética S.A.
Kind of company:
Corporation
Address:
Praia de Botafogo 228, Ala B, 4ª Andar, Río de Janeiro,
R.j. 22 359-900 - Brasil.
Corporate objects (extract):
The production, industrialization, distribution and
commercialization of electricity, including imports and
exports.
Paid capital (ThCh$):
108,488,434
Holding of Enersis (direct and indirect)
27.0%
Directors
Chairman:
Marcelo Llévenes
Roberto José Fagan
José Venegas
Alternate Directors
Nicolás Pérez
Francisco Javier Bugallo
Chief Executive Officer:
Francisco Javier Bugallo
ELEC TRO GAS
Name
Electrogas S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,806,130-5
Alternate Directors
Daniel Martínez
Felipe Aldunate
Pedro Cruz
Gustavo Rioseco
Francisco Courbis
Chief Executive Officer:
Carlos Andreani
TR ANSQ U ILLOTA
Name
Transmisora Eléctrica de Quillota Ltda.
Kind of company:
Limited partnership
Tax No.:
77,017,930-0
Address:
Santa Rosa 76, Santiago, Chile.
Corporate objects (extract):
The transport, distribution and supply of electricity.
Paid capital (ThCh$):
3,507,137
Holding of Enersis (direct and indirect)
22.5%
Representatives
Rodrigo Naranjo
Gabriel Carvajal
Felipe Aldunate
Eduardo Morel
Alternate Representatives
Alfonso Bahamondes
Alejandro Larenas
Enrique Sánchez
Ricardo Sáez
Address:
Apoquindo 3076 Oficina 402, Santiago, Chile.
Corporate objects (extract):
Natural gas and other fuels transportation services
for which it may build, operate and maintain gas,
oil or multi-purpose pipelines and complementary
installations.,
Paid capital (ThCh$):
10,703,686
Holding of Enersis (direct and indirect)
25.6%
Directors
Chairman:
Jaime Fuenzalida
Claudio Iglesis
Gabriel Alejandro Marcuz
Pedro Gatica
Andrés Vargas
I NVERSI O N ES
GASATAC A M A H O LD I N G
Name
Inversiones Gasatacama Holding Limitada
Kind of company:
Limited partnership
Tax No.:
76,014,570-K
Address:
Santiago, Chile
Corporate objects (extract):
Investments in companies that transport natural
gas; generate, transmit, purchase, distribute and sell
energy; and the financing of the above.
Paid capital (ThCh$):
177,562,499
Holding of Enersis (direct and indirect)
30.0%
Directors
Rafael Mateo
Tom Miller
Alfredo Ergas
(Chief Regional Finance Officer of Enersis)
Francisco Mezzadri
Alternate Directors
Rafel de Cea
David Baughman
Juan Benabarre
David Kehoe
GASATAC A M A
Name
Gasatacama S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,830,980-3
Address:
Isidora Goyenechea 3365, Piso 8, Santiago, Chile
Corporate objects (extract):
Management of Gasoducto Atacama Chile Ltda,
Gasoducto Atacama Argentina Ltda. and others;
investment in all kinds of assets.
Paid capital (ThCh$):
162,473,231
Holding of Enersis (direct and indirect)
30.0%
Directors
Chairman:
Rafael Mateo
Alejandro González
Tom Miller
Francisco Mezzadri
Alternate Directors
Juan Benabarre
Rafael de Cea
David Kehoe
David Baughman
Chief Executive Officer:
Rudolf Araneda
GASO D UC TO ATAC A M A
CH ILE
Name
Gasoducto Atacama Chile S.A.
Kind of company:
Closely-held corporation
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
111
Paid capital (ThCh$):
1,739,202
Holding of Enersis (direct and indirect)
29.9%
Directors
Rudolf Araneda
Pedro de La Sota
Rafael Zamorano
Matías Avendaño
Alternate Directors
Alejandro Amenábar
Alejandro Sáez
Eric Bongardt
Luis Vergara
Chief Executive Officer:
Rudolf Araneda
Tax No.:
78,882,820-9
Address:
Isidora Goyenechea 3365, Piso 8, Santiago, Chile.
Corporate objects (extract):
The transport of natural gas within Chile and other
countries, including the building of gas pipelines and
related activities.
Alternate Directors
Juan Benabarre
Rafael de Cea
David Kehoe
David Baughman
Chief Executive Officer:
Rudolf Araneda
Paid capital (ThCh$):
35,745
Holding of Enersis (direct and indirect)
30.0%
Directors
Chairman:
Rafael Mateo
Alejandro González
Tom Miller
Francisco Mezzadri
Alternate Directors
Juan Benabarre
Chief Executive Officer: Ingendesa
Rafael de Cea
David Kehoe
David Baughman
Chief Executive Officer:
Rudolf Araneda
GASATAC A M A GEN ER ACI Ó N
Name
Gasatacama Generación S.A.
Kind of company:
Closely-held corporation
Tax No.:
78,932,860-9
Address:
Isidora Goyenechea 3365, Santiago, Chile.
Corporate objects (extract):
The generation, transmission, purchase, distribution
and sale of electricity; the purchase, extraction,
exploitation, processing, distribution and sale of solid,
liquid and gas fuels; the provision of engineering
services; concessions of all kinds; investments in all
assets; the formation of companies related to energy.
Paid capital (ThCh$):
67,388,344
Holding of Enersis (direct and indirect)
30.1%
Directors
Chairman:
Rafael Mateo
Alejandro González
Tom Miller
Francisco Mezzadri
I NVERSI O N ES ELEC TRO GAS
Name
Inversiones Electrogas S.A.
Kind of company:
Closely-held corporation
Tax No.:
96,889,570-2
Address:
Apoquindo 3076, Oficina 402, Santiago, Chile
I N GEN D ESA M I N ME TAL
Corporate objects (extract):
Investment in the shares of Electrogas S.A.
Name
Consorcio IngEndesa–Minmetal Ltda.
Paid capital (ThCh$):
10,666,916
Holding of Enersis (direct and indirect)
25.5%
Kind of company:
Limited partnership
Tax No.:
77,573,910-k
Address:
Santa Rosa N° 76, Santiago, Chile
Corporate objects (extract):
The provision of all kinds of engineering services.
Paid capital (ThCh$):
2,000
Holding of Enersis (direct and indirect)
29.3%
Representatives
Juan Benabarre
Carlos Freire
Alternate Representatives
Rodrigo Alcaíno
Rodrigo Muñoz
Alejandro Mercados
Osvaldo Dunner
I N GEN D ESA - AR A
Razón social
Sociedad consorcio Ingendesa - Ara Ltda.
Kind of company:
Limited partnership
Tax No.:
76,197,570-6
Address:
Santa Rosa 76, Santiago, Chile
Directors
Chairman:
Jaime Fuenzalida
Alejandro Marcuz
Pedro Gatica
Claudio Iglesis
Daniel Martínez
Alternate Directors
Andrés Vargas
Felipe Aldunate
Pedro Cruz
Gustavo Rioseco
Francisco Courbis
Chief Executive Officer:
Carlos Andreani
GASO D UC TO TALTAL
Name
Gasoducto Taltal S.A.
Kind of company:
Closely-held corporation
Tax No.:
77,032,280-4
Address:
Santa Rosa 76, Santiago, Chile
Corporate objects (extract):
Transportation, commercialization and distribution
of natural gas within Chile, especially between
Mejillones and Paposa, including the construction and
exploitation of pipelines and other related activities.
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
O T H E R S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
112
Corporate objects (extract):
The provision of all kinds of engineering services.
Paid capital (ThCh$):
1,161
Paid capital (ThCh$):
1,000
Holding of Enersis (direct and indirect)
29.3%
Representatives
Juan Benabarre
Alejandro Santolaya
Alternate Representatives
Rodrigo Alcaíno
Alejandro Mercados
Elías Arce
Cristián Araneda
AR A - I N GEN D ESA
Razón social
Consorcio Ara - Ingendesa Ltda.
Kind of company:
Limited partnership
Tax No.:
77,625,850-4
Holding of Enersis (direct and indirect)
30.0%
BOARD OF DIRECTORS:
Rudolf Araneda
Luis Cerda
Pedro de La Sotta
Chief Executive Officer:
Alejandro Sáez
EN ERGE X
Razón social
Energex Co.
Kind of company:
Exempt Corporation
Address:
Caledonian House P.O. Box 265 G, George Town, Grand
Cayman, Cayman Islands.
Corporate objects (extract):
Any business in accordance with the law of the Cayman
Islands.
BOARD OF DIRECTORS:
Chairman:
William J. Haener
Mario Valcarce
(Chief Executive Officer: de Enersis)
Alfredo Ergas
(Chief Regional Finance Office of Enersis)
Rodney E. Boulanger
SACME
Razón social
Sacme S.A.
Kind of company:
Closely-held corporation
Tax No.:
30-65942051-8
Address:
Avda. España 3251 – Ciudad Autónoma de Buenos Aires,
Argentina
Telephone:
4361-5107
Fax:
4307-0701
Address:
Santa Rosa 76 Piso 10, Santiago, Chile
Paid capital (ThCh$):
5,574
External auditors:
Estudio Alonso Hidalgo & Asociados.
Corporate objects (extract):
The provision of all kinds of engineering services.
Holding of Enersis (direct and indirect)
29.8%
Total number of shares:
12,000
Paid capital (ThCh$):
1,000
Holding of Enersis (direct and indirect)
29.3%
Representatives
Juan Benabarre
Alejandro Santolaya
Alternate Representatives
Fernando Orellana
Alejandro Mercados
Rodrigo Alcaíno
Elías Arce
Cristián Araneda
PRO GAS
Razón social
Progas S.A.
Kind of company:
Limited partnership
Tax No.:
77,625,850-4
BOARD OF DIRECTORS:
Chairman:
William J. Haener
Mario Valcarce
(Chief Executive Officer: de Enersis)
Alfredo Ergas
(Chief Regional Finance Office of Enersis)
Rodney E. Boulanger
ATAC A M A FI NANCE
Razón social
Atacama Finance Co.
Kind of company:
Exempt Corporation
Address:
Caledonian House P.o. Box 265 G, George Town, Grand
Cayman, Cayman Islands.
Corporate objects (extract):
Any business in accordance with the law of the Cayman
Islands.
Paid capital (ThCh$):
3,511,620
Capital suscrito y pagado (Pesos Argentinos)
12,000
Holding of Enersis (direct and indirect)
32.5%
Corporate objects (extract):
Supervision and control of the electricity generation,
transmission and distribution system in Buenos Aires
and the interconnections with the Argentine Grid
System (SADI). Represent the distribution companies
Edenor S.A. and Edesur S.A. in operative work with
Compañía Administradora del Mwercado Mayorista
Eléctrico (CAMMESA).
BOARD OF DIRECTORS:
Chairman:
Mario Nicolás Covacich
Vice Chairman
Daniel Héctor Colombo
Directors
Edgardo Alberto Volosín
Leandro Ostuni
Chief Executive Officer:
Osvaldo Ernesto Rolando
Address:
Isidora Goyenechea 3356, 8° Piso, Santiago, Chile
Holding of Enersis (direct and indirect)
29.8%
Corporate objects (extract):
The acquisition, production, storage, transport,
distribution, transformation and commercialization
of natural gas and of other oil derivatives and fuels in
general, and the provision of related services.
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
113
C O M M E R C I A L R E L A T I O N S W I T H S U B S I D I A R Y
A N D A S S O C I A T E C O M P A N I E S
The following tables show the commercial relations between Enersis S.A. and its subsidiaries and associates:
TR A NSACTI O NS W ITH CHIL EAN S UBSID IAR IE S AND AS SO CIAT E S
AT D ECE MBER 3 1, 20 04
COMPANY
TA X NO .
R E LA TI ONSHIP
TR ANSACTION
Chilectra S.A.
96.524.320-8
Subsidiary
Loans
Property rentals
Services provided
Inmobiliaria Manso
de Velasco Ltda.
Compañía Americana
de Multiservicios Ltda.
79.913.810-7
Subsidiary
Loans
Property rentals
96.543.670-7
Subsidiary
Loans
Services provided
Materials
Property maintenance
Synapsis, Soluciones
y Servicios IT Ltda.
96.529.420-1
Subsidiary
Loans
Services received
Endesa (Chile)
91.081.000-6
Subsidiary
Loans
Services provided
Endesa Inversiones
Generales S.A.
96.526.450-7
Related to
subsidiary
Property rentals
AM OUNT
98,895,455
4,432,912
4,735,989
(8,869,004)
(368,316)
(4,836,514)
215,229
(18,324)
(494,128)
(1,657,475)
(474,047)
929,866
739,618
(990,824)
92,240,437
EF FE CT ON RESULTS
( CHA RG E) CREDIT
4,460,581
4,432,912
4,735,989
(646,667)
(368,316)
(443,669)
215,229
(18,324)
(494,128)
(194,368)
(474,047)
2,062,053
739,618
(990,824)
13,016,039
TR A NS A CT IO NS WITH F ORE IGN SU BSID IA R IE S A ND AS SOC IAT ES
COMPANY
TA X NO .
R E LA TI ONSHIP
TR ANSACTION
AT D ECE MBER 3 1, 20 04
AM OUNT
EF FE CT ON RESULTS
( CHA RG E) CREDIT
Empresa Distribuidora Sur S.A.
Foreign
Subsidiary
Services provided
1,968,506
1,968,506
through Agency:
Chilectra S.A.
(Cayman Islands Agency)
Luz de Río Ltda.
Enersis Internacional
Chilectra Internacional
Foreign
Foreign
Foreign
Foreign
Agency of
subsidiary
Subsidiary
Subsidiary
Subsidiary
Loans
Loans
Loans
Loans
308,861,143
26,153,180
4,530,047
3,796,843
21,136,955
1,716,375
400,218
56,936
Endesa Chile Internacional
Foreign
Subsidiary
Loans
(29,391,075)
(25,830)
Endesa Chile Agencia
Foreign
Agency of
subsidiary
Loans
Global Total
(25,192,350)
290,726,294
382,966,731
(64,184)
25,188,976
38,205,015
C O M M E R C I A L R E L A T I O N S W I T H S U B S I D I A R Y A N D A S S O C I A T E C O M P A N I E S
114
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
115
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
11 7
R EP O RT O F I N D EPEN D EN T ACCO U N TA N TS
11 8
CO N S O L I DAT ED BA L A N CE S H EE TS
12 0
CO N S O L I DAT ED I N CO M E STAT E M EN T
12 1
STAT E M EN TS O F CO N S O L I DAT ED C A S H FLOWS
12 3
12 4
CO N S O L I DAT ED STAT E M EN TS O F CH A N G ES I N S H A R EH O L D ERS’ EQ U I T Y
N OT ES TO T H E CO N S O L I DAT ED FI N A N CI A L S TAT E M EN TS
23 4
CO N S O L I DAT ED M AT ER I A L I N F O R M AT I O N
24 1
M A N AG E M EN T’S A N A LYS I S O F T H E CO N S O L I DAT ED FI N A N CI A L STAT E M EN TS
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
116
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
R E P O R T O F I N D E P E N D E N T A C C O U N T A N T S
117
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
118
C O N S O L I D A T E D B A L A N C E S H E E T S
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s a s o f
D e c e m b e r 31, 2 0 0 4 a n d t h o u s a n d s o f U S d o l l a r s )
ASSETS
CURRENT ASSETS
Cash
Time deposits
Marketable securities
Accounts receivable, net
Notes receivable, net
Other accounts receivable, net
Amounts due from related companies
Inventories
Income taxes recoverable
Prepaid expenses
Deferred income taxes
Other current assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT
Land
Buildings and infrastructure and works in progress
Machinery and equipment
Other plant and equipment
Technical appraisal
Acumulated depreciation
As of December 31,
2003
ThCh$
2004
ThCh$
2004
ThUS$
27,029,488
56,494,414
262,660,971
450,743,859
11,434,635
12,321,537
478,849,624
528,740,129
8,571,693
96,549,123
17,486,628
45,415,899
62,818,496
16,863,806
53,023,911
75,777,002
2,828,014
63,814,202
114,385,763
50,981,315
97,637,872
45,011,188
60,005,717
36,117,180
101,353
808,654
22,105
948,583
5,074
114,485
205,213
91,463
175,167
80,752
107,653
64,796
1,156,481,276
1,519,081,190
2,725,298
118,340,129
122,606,995
10,305,284,602
9,864,985,666
1,806,292,572
1,721,120,263
356,791,936
398,709,319
634,958,011
584,183,038
(4,922,897,727)
(5,006,783,339)
219,962
17,698,216
3,087,765
715,302
1,048,050
(8,982,388)
Total property, plant and equipment, net
8,298,769,523
7,684,821,942
13,786,907
OTHER ASSETS
Investments in related companies
Investments in other companies
Goodwill, net
Negative goodwill, net
Long-term receivables
Amounts due from related companies
Intangibles
Accumulated amortization
Other assets
Total other assets
TOTAL ASSETS
184,716,758
191,465,062
136,796,804
49,992,754
799,907,148
733,535,103
(81,215,498)
(56,735,814)
131,133,420
125,910,089
132,331,429
456,246
79,100,256
80,708,810
(40,254,130)
(44,013,845)
185,126,301
222,303,602
343,497
89,689
1,315,994
(101,786)
225,888
819
144,795
(78,963)
398,822
1,527,642,488
1,303,622,007
2,338,755
10,982,893,287 10,507,525,139
18,850,960
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
119
As of December 31,
2003
ThCh$
2004
ThCh$
2004
ThUS$
319,960,476
191,923,129
169,837,388
106,940,945
72,718,823
107,084,047
21,969,710
3,237,512
26,749,661
3,399,501
220,830,333
253,002,503
21,596,628
45,014,408
31,517,000
55,046,830
65,295,025
49,036,057
12,274,758
66,994,856
13,409,165
38,606,503
81,508,675
44,333,117
49,749,518
54,418,780
6,504,696
41,180,674
344,318
191,857
192,113
47,990
6,099
453,898
24,057
69,262
146,230
79,535
89,253
97,630
11,670
73,880
1,155,329,804
1,018,810,914
1,827,792
854,742,232
626,112,271
2,356,777,340
2,493,500,109
148,976,745
143,254,068
27,472,799
50,583,709
1,123,273
4,473,448
257,004
90,749
86,428
-
-
325,352,408
311,025,273
7,194,942
63,535,888
61,845,032
116,143,763
557,993
113,986
208,367
3,782,447,926
3,804,155,081
6,824,820
3,433,013,869
3,125,006,002
5,606,398
2,283,404,124
2,283,404,124
4,096,527
163,306,446
162,725,821
(26,313,477)
(122,588,994)
180,417,144
194,378,259
12,779,560
(1,492,109)
44,307,596
(2,673,664)
291,937
(219,930)
348,723
79,490
(4,797)
LIABILITIES AND SHAREHOLDERS´EQUITY
CURRENT LIABILITIES:
Short-term debt due to banks and financial institutions
Current portion of long-term debt due to banks and financial institutions
Current portion of bonds payable
Current portion of long-term notes payable
Dividends payable
Accounts payable
Short-term notes payable
Miscellaneous payables
Amounts payable to related companies
Accrued expenses
Withholdings
Income taxes payable
Deferred income
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:
Due to banks and financial institutions
Bonds payable
Long-term notes payable
Accounts payable
Amounts payable to related companies
Accrued expenses
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
MINORITY INTEREST
SHAREHOLDERS´ EQUITY:
Paid-in capital, no par value
Additional paid-in capital
Other reserves
Retained earnings
Net income (loss) for the year
Deficit of subsidiaries in development stage
Total shareholders´ equity
2,612,101,688
2,559,553,142
4,591,950
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY
10,982,893,287 10,507,525,139
18,850,960
The accompanying notes are an integral part of these consolidated financial statements.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
120
C O N S O L I D A T E D I N C O M E S T A T E M E N T
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s a s o f
D e c e m b e r 31, 2 0 0 4 a n d t h o u s a n d s o f U S d o l l a r s )
OPERATING INCOME:
SALES
COST OF SALES
GROSS PROFIT
As of December 31,
2003
ThCh$
2004
ThCh$
2004
ThUS$
2,418,451,270
2,708,925,344
(1,695,212,019)
(1,898,087,991)
4,859,930
(3,405,253)
723,239,251
810,837,353
1,454,677
ADMINISTRATIVE AND SELLING EXPENSES
(173,741,457)
(176,635,722)
(316,892)
OPERATING INCOME
549,497,794
634,201,631
1,137,785
NON-OPERATING INCOME AND EXPENSE:
Interest income
Equity in income of related companies
Other non-operating income
Equity in loss of related companies
Amortization of goodwill
Interest expense
Other non-operating expenses
Price-level restatement, net
Exchange difference, net
68,916,018
18,198,366
73,635,633
31,146,566
195,206,651
133,632,882
(243,650)
(683)
(54,558,943)
(53,201,320)
(430,943,444)
(360,140,223)
(252,038,400)
(207,355,499)
(4,611,876)
(6,205,662)
(776,878)
14,406,781
132,106
55,878
239,743
(1)
(95,445)
(646,107)
(372,005)
(1,394)
25,846
NON-OPERATING EXPENSE, NET
(466,280,940)
(368,652,741)
(661,379)
INCOME (LOSS) BEFORE INCOME TAXES
83,216,854
265,548,890
476,406
INCOME TAXES
(42,609,984)
(137,241,207)
(246,217)
INCOME (LOSS) BEFORE MINORITY INTEREST AND AMORTIZATION OF NEGATIVE GOODWILL
40,606,870
128,307,683
230,189
MINORITY INTEREST
(80,282,913)
(101,106,989)
(181,390)
INCOME (LOSS) BEFORE AMORTIZATION OF NEGATIVE GOODWILL
(39,676,043)
27,200,694
48,799
AMORTIZATION OF NEGATIVE GOODWIL
52,455,603
17,106,902
30,691
NET INCOME (LOSS) FOR THE YEAR
12,779,560
44,307,596
79,490
The accompanying notes are an integral part of these consolidated financial statements
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
S T A T E M E N T S O F C O N S O L I D A T E D C A S H F L O W S
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s a s o f
D e c e m b e r 31, 2 0 0 4 a n d t h o u s a n d s o f U S d o l l a r s )
121
Net income (loss) for the year
GAIN (LOSSES) FROM SALES OF ASSETS:
Losses (gain) on sale of property, plant and equipment
Gain on sale of investments
Losses on sale of other assets
Charges (credits) to income which do not represent cash flows:
Depreciation
Amortization of intangibles
Write-offs and accrued expenses
Equity in income of related companies
Equity in losses of related companies
Amortization of goodwill
Amortization of negative goodwill
Price-level restatement, net
Exchange difference, net
Other credits to income which do not represent cash flows
Other charges to income which do not represent cash flows
Changes in assets which affect operating cash flows:
Decrease (increase) in trade receivables
Decrease (increase) in inventory
Decrease (increase) in other assets
Changes in liabilities which affect operating cash flows:
Increase (decrease) in acounts payable associated with operating results
Increase (decrease) in interest payable
Increase (decrease) in income tax payable
Increase in other accounts payable associated
Net decrease (increase) in value added tax and other similar taxes payable
Income (loss) attributable to minority interest
2003
ThCh$
12,779,560
As of December 31,
2004
ThCh$
44,307,596
2004
ThUS$
79,490
6,410,580
(91,517,236)
409,474
(6,613,618)
-
(227,863)
(11,865)
-
(409)
406,326,019
8,798,057
55,762,447
(18,198,366)
243,650
54,558,943
(52,455,603)
4,611,876
6,205,662
(30,521,567)
157,087,979
379,491,166
6,801,368
38,380,540
(31,146,566)
683
53,201,320
(17,106,902)
776,878
(14,406,781)
(15,464,081)
111,142,000
(86,517,194)
10,631,639
19,852,923
(24,173,451)
(6,983,775)
(7,544,309)
32,552,808
(11,368,109)
(42,043,955)
40,178,565
24,767,831
80,282,913
(9,452,542)
46,422,045
38,053,662
(65,352,965)
(3,205,890)
101,106,989
680,824
12,202
68,856
(55,878)
1
95,445
(30,691)
1,394
(25,846)
(27,743)
199,394
(43,368)
(12,529)
(13,535)
(16,958)
83,283
68,270
(117,246)
(5,752)
181,390
Net cash flows provided by operating activities
588,838,896
618,005,504
1,108,729
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
122
S T A T E M E N T S O F C O N S O L I D A T E D C A S H F L O W S , C O N T I N U E D
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s a s o f
D e c e m b e r 31, 2 0 0 4 a n d t h o u s a n d s o f U S d o l l a r s )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares to minority shareholders
Proceeds from the issuance of debt
Proceeds from bond issuances
Other sources of financing
Distribution of capital in subsidiary
Dividends paid
Payment of debt
Payment of bonds
Payment of loans obtained from related companies
Payment of share issuance costs
Payment of bond issuance costs
Other disbursements for financing
2003
ThCh$
As of December 31,
2004
ThCh$
2004
ThUS$
560,126,472
1,048,163,788
848,824,902
24,639,020
(24,632,422)
(82,815,176)
(2,181,273,813)
(499,247,807)
(4,579,223)
(11,102,445)
(5,823,428)
(118,931,382)
-
827,706,442
328,720,066
22,781,843
(21,172,115)
(97,013,165)
(1,191,304,739)
(22,110,493)
-
-
(2,363,467)
(34,368,618)
-
1,484,942
589,738
40,872
(37,984)
(174,046)
(2,137,253)
(39,667)
-
-
(4,240)
(61,659)
Net cash used in financing activities
(446,651,514)
(189,124,246)
(339,297)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment
Sales of investment in related companies
Other loans received from related companies
Other receipts from investments
Additions to property, plant and equipment
Long-term investments
Other loans granted to related companies
Other investment disbursements
164,779,451
124,873,051
25,596,801
51,033,045
(265,255,289)
(3,061,889)
(320,222)
(7,060,165)
15,537,528
2,557,742
15,294,722
40,574,360
(265,934,353)
(343,959)
-
(1,591,615)
27,875
4,589
27,439
72,792
(477,098)
(617)
-
(2,855)
Net cash provided by (used in) investing activities
90,584,783
(193,905,575)
(347,875)
POSITIVE NET CASH FLOW FOR THE PERIOD
232,772,165
234,975,683
421,557
EFECT OF PRICE-LEVEL RESTATEMENT ON CASH AND CASH EQUIVALENTS
(122,485,005)
(27,014,194)
(48,465)
NET INCREASE IN CASH AND CASH EQUIVALENTS
110,287,160
207,961,489
373,092
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
228,988,688
339,275,848
608,676
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
339,275,848
547,237,337
981,768
The accompanying notes are an integral part of these consolidated financial statements
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
C O N S O L I D A T E D S T A T E M E N T S O F C H A N G E S I N S H A R E H O L D E R S ’ E Q U I T Y
( E x p r e s s e d i n t h o u s a n d s o f h i s t o r i c a l C h i l e a n p e s o s , e x c e p t a s s t a t e d )
123
As of January 1, 2003
Capital increase
Transfer of prior year loss to retained earnings
Changes in equity of affiliates
Deficit of subsidiaries in the development stage
Cumulative translation adjustment
Price-level restatement of capital
Net income for the year
Paid-in
capital
ThCh$
Additional
paid-in
capital
ThCh$
Deficit of
Net income
Other
reserves
ThCh$
Retained
earnings
ThCh$
subsidiaries in
development stage
ThCh$
(loss) for
the year
ThCh$
Total
ThCh$
751,208,197
33,370,057
46,879,587
402,807,650
(4,937,110)
(223,748,087) 1,005,580,294
1,471,844,920 125,881,577
-
-
-
-
-
-
-
-
-
-
(11,432,599)
-
(61,587,469)
-
-
- 1,597,726,497
(228,581,520)
4,833,433
223,748,087
-
-
-
-
-
(1,302,667)
-
-
-
-
-
(11,432,599)
(1,302,667)
(61,587,469)
6,939,971
4,658,223
71,728
468,796
1,790,596
(49,372)
-
-
-
-
-
12,467,863
12,467,863
As of December 31, 2003
2,227,711,340 159,323,362
(25,671,685)
176,016,726
(1,455,716)
12,467,863 2,548,391,890
As of December 31, 2003 (1)
2,283,404,124 163,306,446
(26,313,477)
180,417,144
(1,492,109)
12,779,560 2,612,101,688
As of January 1, 2004
Capital increase
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Cumulative translation adjustment
Reserve Technical Bulletin No. 72
Price-level restatement of capital
Net income for the year
2,227,711,340
159,323,362
(25,671,685)
176,016,726
(1,455,716)
12,467,863 2,548,391,890
(563,714)
-
-
-
-
-
-
-
-
(4,435,524)
(103,832,123)
11,992,130
-
-
-
(563,714)
13,629,822
(1,161,959)
(12,467,863)
-
-
-
-
-
-
-
-
-
-
-
(4,435,524)
(103,832,123)
11,992,130
63,692,887
55,692,784
3,966,173
(641,792)
4,731,711
(55,989)
-
-
-
-
-
44,307,596
44,307,596
As of December 31, 2004
2,283,404,124 162,725,821
(122,588,994)
194,378,259
(2,673,664)
44,307,596 2,559,553,142
As of December 31, 2004 (2)
4,096,527
291,937
(219,930)
348,723
(4,797)
79,490
4,591,950
(1) Restated in thousands of constant Chilean pesos as of December 31, 2004.
(2) Restated in thousands of constant US$ as of December 31, 2004
The accompanying notes are an integral part of these consolidated financial statements
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
124
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s o f
D e c e m b e r 31, 2 0 0 4 , e x c e p t a s s t a t e d ) A s o f a n d f o r t h e y e a r s e n d e d D e c e m b e r 31, 2 0 0 3 a n d 2 0 0 4
N OTE 1. D ESCRIP TI O N O F BUSI N ESS
Enersis S.A. (the “Company”) is registered in the Securities
Regis ter under No.0175 and is regulated by the Chilean
Superintendency of Securities and Insurance (the “SVS”). The
Company issued publicly registered American Depositary Receipts
in 1993 and 1996. Enersis S.A. is a reporting company under the
United States Securities and Exchange Act of 1934.
The Company’s subsidiaries, Chilectra S.A. and Empresa
Nacional de Electricidad S.A. (Endesa S.A.) are registered in the
Securities Register under No. 0321 and 0114, respectively.
N OTE 2. SUM M ARY O F SI G N IFIC ANT
ACCO U NTI N G P O LICIES
a) General
(i)
The consolidated financial statements of the Company
have been prepared in accordance with generally accepted
accounting principles in Chile and the regulations established
by the SVS (collectively “Chilean GAAP”), and the specific
corporate regulations of Law No.18,046, related to the
formation, registration and liquidation of Chilean corporations,
among others. Certain amounts in the prior year’s financial
statements have been reclassified to conform to the current
year’s presentation.
The preparation of financial statements in conformity with
Chilean GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, disclosures of contingent assets and liabilities as of
the date of the financial statements, and the reported amounts
of revenues and expenses during the reporting year. Actual
results could differ from those estimates.
In certain cases generally accepted accounting principles in
Chile require that assets or liabilities be recorded or disclosed
at their fair values. The fair value is the amount at which
an asset could be bought or sold or the amount at which a
liability could be incurred or settled in a current transaction
between willing parties, other than in a forced or liquidation
sale. Where available, quoted market prices in active markets
have been used as the basis for the measurement; however,
where quoted market prices in active markets are not available,
the Company has estimated such values based on the best
information available, including using modeling and other
valuation techniques.
(ii)
Reclassifications - For purposes of comparison, the following reclassifications were made in the 2003 financial statements:
From
2003:
Balance sheet reclassifications
Charge
ThCh$
To
Credit
ThCh$
Deferred income taxes liabilities long-term
18,172,355
Deferred income taxes assets short-term
(18,172,355)
From
Other non-operating income
Other non-operating expenses
Statement of operations reclassifications
Credit
ThCh$
To
7,309,555
Operating Income
(2,186,889)
Operating Expenses
Charge
ThCh$
(7,309,555)
2,186,889
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
125
(iii) The accompanying financial statements reflect the consolidated results of operations of Enersis S.A. and its subsidiaries. All significant
intercompany transactions have been eliminated in consolidation. Investments in companies in the development stage are accounted
for using the equity method, except that income or losses are included directly in equity instead of being reflected in the Company’s
consolidated statement of operations. The Company consolidates the financial statements of companies in which it controls over 50%
of the voting shares, provided there are no substantive minority participating rights that prevent control, as detailed as follows:
Company
Chilectra S.A.
Compañía Eléctrica del Río Maipo S.A. (2)
Synapsis Soluciones y Servicios IT Ltda.
Inmobiliaria Manso de Velasco Ltda.
Cía. Americana de Multiservicios Ltda.
Endesa Chile S.A. (4)
Elesur S.A. (4)
Enersis de Argentina S.A. (3)
Enersis Internacional Ltda.
Inversiones Distrilima S.A.
Empresa Distribuidora Sur S.A. (Edesur)
Luz de Bogotá S.A. (5)
Codensa S.A. (5)
Cerj
Investluz (1)
Percentage participation in voting rights as of December 31,
2003
2004
Total
98.24
Direct
98.24
-
-
Indirect
-
-
0.01
0.00
0.07
-
-
-
-
39.75
49.07
Total
98.24
-
100.00
100.00
100.00
59.98
100.00
-
100.00
55.68
65.09
99.99
100.00
99.93
59.98
100.00
-
100.00
15.93
16.02
-
-
-
12.47
35.13
15.61
9.19
45.29
39.52
21.66
80.41
55.13
100.00
100.00
100.62
59.98
-
-
100.00
55.68
65.09
44.66
-
71.81
52.00
Enersis Energía de Colombia S.A. (3)
-
-
-
-
(1)
Investluz is Parent Company of Companhia Energética do Céará S.A. Coelce. The Company obtained shareholder agreements dated June 25, 1999, from Endesa International, the majority
shareholder of these companies, giving the Company the right to elect a majority of the Board of Directors. The Superintendency of Securities and Insurance was notified on June 28, 1999.
(2) On April 30, 2003, Compañía Eléctrica del Río Maipo S.A. was sold to Compañía General de Electricidad Industrial S.A. and, as a result, that company ceased to be reflected in our consolidation from
January 1, 2003 and was treated as an equity - method investee until its sale.
(3) Enersis de Argentina S.A. and Enersis Energía de Colombia S.A. have been dissolved during 2003.
(4) On May 27, 2004, 99.9989% of Elesur S.A. was purchased, therefore, as from that date if is consolidated into Enersis S.A. financial statements.
(5) On July 9, 2004 the subsidiary Luz de Bogotá S.A., which had investment in Codensa, was liquidated. As a result of the liquidation, the Enersis and Chilectra agencies that owned Luz de
Bogotá S.A. shares have direct investment in Codensa S.A.
Codensa S.A. is consolidated because of the majority presence on the board of directors, obtained through the shareholders’ agreement of January 27, 2004, between Endesa Internacional and
subsidiaries of Enersis S.A.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
126
(iv)
Consolidated subsidiaries of Endesa Chile S.A. area detailed as follows:
Company name
Enigesa S.A.
Ingendesa S.A.
Pehuenche S.A.
Endesa Argentina S.A. (5)
Endesa-Chile Internacional
Pangue S.A.
Hidroinvest S.A.
Infraestructura 2000 S.A. (1)
Hidroeléctrica El Chocón S.A.
Central Costanera S.A.
Endesa Brasil Participacoes Ltda.
Túnel El Melón S.A.
Soc. Concesionaria Autopista del Sol S.A. (1)
Inecsa 2000 S.A. (1)
Soc. Concesionaria Autopista Los Libertadores S.A. (1)
Compañía Eléctrica Cono Sur S.A.
Central Hidroeléctrica Betania S.A.
Endesa de Colombia S.A. (4)
Lajas Inversora S.A.
Centrais Electricas Cachoeira Dourada S.A.
Capital de Energía S.A.
Emgesa S.A (2)
Edegel S.A.
Generandes Perú S.A.
Compañía Eléctrica San Isidro S.A. (3)
Compañía Eléctrica Tarapacá S.A.
Inversiones Endesa Norte S.A.
Ingendesa Do Brasil Limitada
Percentage participation in voting rights as of December 31,
2003
2004
Total
%
100.00
97.64
92.65
99.99
100.00
94.99
69.93
-
65.19
64.26
100.00
99.95
-
-
-
100.00
85.62
100.00
100.00
99.61
50.90
48.48
63.56
59.63
100.00
100.00
100.00
100.00
Direct
%
99.51
96.39
92.95
97.99
100.00
94.97
-
-
-
12.33
5.00
99.95
-
-
-
100.00
0.44
-
100.00
-
0.05
-
-
-
100.00
100.00
99.91
-
Indirect
%
0.49
1.25
-
2.00
Total
%
100.00
97.64
92.95
99.99
-
100.00
0.02
69.93
94.99
69.93
-
-
65.19
51.93
95.00
-
-
-
-
-
85.18
-
-
99.61
50.95
51.32
63.56
59.63
-
-
0.09
100.00
65.19
64.26
100.00
99.95
-
-
-
100.00
85.62
-
100.00
99.61
51.00
51.32
63.56
59.63
100.00
100.00
100.00
100.00
1.
On June 23, 2003 Infraestructura 2000 Holding and its consolidated subsidiaries was sold, and a result, these companies ceased to be consolidated in our financial statements Chile-from
January 1, 2003 and were treated as equity - method investees until their sale. On June 23, 2003 these companies were sold as part of the sale of Infraestructura 2000.
Endesa-Chile exercises control over this company under an agreement with other shareholders.
Endesa-Chile directly owns all of shares A, which compose 50% of share capital of this company. Only shares A have voting rights - other shareholders do not have voting rights.
2.
3.
4. On December 17, 2004, the Colombian subsidiary Endesa de Colombia S.A., which had part of the investment in Central Hidroeléctrica Betania S.A. (8.91%), was sold off; as a result of the sale,
Endesa Matriz and Compañía Eléctrica Cono Sur S.A., which held Endesa shares in Colombia S.A., now direct ownership in Central Hidroeléctrica Betania S.A.
5. On November 17, 2004, Endesa sold 492,920 shares of Endesa Argentina to Endesa Inversiones Generales S.A., equivalent to 2% of its ownership of such Company.
b) Years covered
c) Constant currency restatement
These financial statements reflect the Company’s financial
position as of December 31, 2003 and 2004, and the results of its
operations, the changes in its shareholders’ equity and its cash flows
for the years ended December 31, 2003 and 2004.
The cumulative inflation rate in Chile as measured by the
Chilean Consumer Price Index (“CPI”) for the two-year ended
December 31, 2004 was approximately 3.52%.
Chilean GAAP requires that the financial statements be restated
to reflect the full effects of gain or loss in the purchasing power of the
Chilean peso on the financial position and results of operations of
reporting entities. The method described below is based on a model
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
127
that enables calculation of net inflation gains or losses caused by
monetary assets and liabilities exposed to changes in the purchasing
power of local currency. The model prescribes that the historical
cost of all non-monetary accounts be restated for general price-level
changes between the date of origin of each item and the year-end.
The financial statements of the Company have been price-
level restated in order to reflect the effects of the changes in the
purchasing power of the Chilean currency during each year. All
non-monetary assets and liabilities, all equity accounts and income
statement accounts have been restated to reflect the changes in
the CPI from the date they were acquired or incurred to year-end
(see also Note 24).
The purchasing power gain or loss included in net income
reflects the effects of Chilean inflation on the monetary assets and
liabilities held by the Company.
The restatements were calculated using the official consumer
price index of the National Institute of Statistics and based on the
“prior month rule,” in which the inflation adjustments are based
on the CPI at the close of the month preceding the close of the
respective year or transaction. This index is considered by the
business community, the accounting profession and the Chilean
government to be the index that most closely complies with the
technical requirement to reflect the variation in the general level
of prices in Chile, and consequently it is widely used for financial
reporting purposes.
The values of the Chilean consumer price indices used to reflect
the effects of the changes in the purchasing power of the Chilean
peso (“price-level restatement”) are as follows:
November 30, 2003
November 30, 2004
Change over
Previous
November 30,
1.0%
2.5%
Index
114.44
117.28
By way of comparison, the actual values of the Chilean
consumer price indices as of the balance sheet dates are as
follows:
December 31, 2003
December 31, 2004
Change over
Previous
December 31,
1.1%
2.4%
Index
114.07
116.84
The above-mentioned price-level restatements do not purport
to represent appraisal or replacement values and are only intended
to restate all non-monetary financial statement components in terms
of local currency of a single purchasing power and to include in net
income or loss for each year the gain or loss in purchasing power
arising from the holding of monetary assets and liabilities exposed
to the effects of inflation.
Index-linked assets and liabilities
Assets and liabilities that are denominated in index-linked units
of account are stated at the year-end values of the respective units of
account. The principal index-linked unit used in Chile is the Unidad
de Fomento (“UF”), which is adjusted daily to reflect the changes in
Chile’s CPI. Certain of the Company’s investments are linked to the
UF. As the Company’s indexed liabilities exceed its indexed assets,
the increase in the index results in a net loss on indexation. Values
for the UF are as follows (historical Chilean pesos per UF):
December 31, 2003
December 31, 2004
Comparative financial statements
Ch$
16,920.00
17,317.05
For comparative purposes, the 2003 consolidated financial
statements and the amounts disclosed in the related Notes have
been restated in terms of Chilean pesos of December 31, 2004,
purchasing power.
This updating does not change the prior years’ statements or
information in any way except to update the amounts to constant
Chilean pesos of similar purchasing power.
Convenience translation to U.S. dollars
The financial statements are stated in Chilean pesos. The
translations of Chilean pesos into US dollars are included solely for
the convenience of the reader, using the observed exchange rate
reported by the Chilean Central Bank as of December 31, 2004 of
Ch$557.4 to US$1.00. The convenience translations should not be
construed as representations that the Chilean peso amounts have
been, could have been, or could in the future be, converted into US
dollars at this or any other rate of exchange.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
128
d) Assets and liabilities in foreign currencies
g)
Inventories
8,408,776.27
7,874,799.07
h) Property, plant and equipment
Assets and liabilities denominated in foreign currencies are
detailed in Note 31. These amounts have been stated at the observed
exchange rates reported by the Central Bank of Chile as of each
December 31, as follows:
Currency
United States dollar
British pound sterling
Colombian peso
New Peruvian sol
Brazilian real
Japanese yen
Euro
Pool Unit (IBRD)(1)
Unidad de Fomento (UF)
Unit of Account (IDB) (1)
Symbol
used
US$
£
$Col
Soles
Rs
¥
€
UP
UF
UC
Argentine peso
$Arg
2003
Ch$
593.80
1,056.21
0.21
171.62
205.52
5.55
744.95
2004
Ch$
557.40
1,073.37
0.23
169.84
209.99
5.41
760.13
16,920.00
17,317.05
970.23
200.61
899.42
187.65
(1) Units of measurement used by the International Bank for Reconstruction and Development
(IBRD) and Interamerican Development Bank (IDB) to express the weighted-average of
multicurrency loan obligations granted using fixed currency rates to the US dollar, at a
determined date.
e) Time deposits and marketable securities
Time deposits are presented at original placement plus accrued
interest and UF indexation adjustments, as applicable. Marketable
securities include investments in quoted shares that are valued at
the lower of cost or market value. The investments are in both short-
term highly liquid fixed rate investment shares and mutual fund units
valued at cost plus interest and indexation or redemption value as
appropriate (Note 4).
f) Allowance for doubtful accounts
The estimates for the allowance for doubtful accounts have
been made considerating the aging and nature of the accounts
receirables. Accounts receivable are classified as current or long-
term, depending on their collection terms. Current and long-term
trade accounts receivable, notes receivable and other receivables
are presented net of allowances for doubtful accounts (see Note 5).
The allowance for doubtful accounts amounted ThCh$106,994,829
and ThCh$104,345,683 for the years ended December 31, 2003 and
2004, respectively. In addition, the total sum owed by companies
that have gone into bankruptcy amounting to ThCh$908,570 in 2004
and ThCh$842,006 in 2003, is included in the bad debt allowance
estimation.
Inventory of materials in transit, and operation and
maintenance materials on hand, are valued at the lower of price-
level restated cost or net realizable value.
The cost of real estate projects under development, included in
inventory, include the cost of land, demolition, urbanizing, payments
to contractors and other direct costs.
The costs and revenues of construction in progress are
accounted for under the completed contract method in accordance
with Technical Bulletin No. 39 of the Chilean Association of
Accountants and are included in current assets as their realization
is expected in the short-term.
Property, plant and equipment are valued at net replacement
cost as determined by the former Superintendency of Electric and Gas
Services (SEG) adjusted for price-level restatement in accordance
with D.F.L. No.4 of 1959. The latest valuation under the D.F.L. 4
was in 1980.
Property, plant and equipment acquired after the latest
valuation of net replacement cost are shown at cost, plus price-
level restatement. Interest on debt directly obtained to finance
construction projects is capitalized during the year of construction
(only in power generators).
In 1986, an increase based upon a technical appraisal
of property, plant and equipment was recorded in the manner
authorized by the SVS in Circulars No.’s 550 and 566 dated October 15
and December 16, 1985, respectively, and Communication No.4790,
dated December 11, 1985.
In accordance with Chilean GAAP, the Company has evaluated
the recoverability of its foreign investments as required by Technical
Bulletin No. 33 of the Chilean Association of Accountants. It is the
Company’s policy, when evidence exists of an other than temporary
impairment of fixed assets, such that the Company’s operations
are not expected to generate sufficient net cash flows, to recover
all fixed asset costs, including depreciation, that the book values
of those assets must be reduced to their net realizable values
with a charge to non-operating expenses. The Company has not
identified impairments in the net book values of its property, plant
and equipment.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
129
i) Depreciation
Depreciation expense is calculated on the revalued balances
using the straight-line method over the estimated useful lives of
the assets.
The table below provides the useful life range for our most
significant fixed assets classes.
Table
Distribution and transmission lines network
Substations
Public lighting
Generator and turbines
Combined cycle
j)
Leased assets
Useful life
in years
20 – 50
20 – 40
20 – 40
20 – 40
20 – 40
The leased assets, whose contracts have financial lease
characteristics, are accounted for as an acquisition of property, plant
and equipment, recognizing the total obligation and the unrecorded
interest. Said assets do not legally belong to the Company, for which
reason, as long as the purchase option is not exercised, it will not be
able to freely dispose of them.
k) Power installations financed by third parties
As established by D.F.L. 1 of the Ministry of Mines dated
September 13, 1982, power installations financed by third parties
are treated as reimbursable contributions. As such, the installations
constructed using this mechanism form part of the Company’s plant
and equipment.
Such installations completed prior to D.F.L. 1 are deducted from
Plant and equipment and their depreciation is charged to Power
installations financed by third parties.
restated, the effects of which are reflected in income, while the
effects of the foreign exchange gains or losses between the Chilean
peso and the US dollar on the foreign investment measured in US
dollars, are reflected in equity in the account “Cumulative Translation
Adjustment”.
Investments in related companies over which the Company has
significant influence are included in Other assets and are recorded
using the equity method. Accordingly, the Company’s proportional
share in net income (or loss) of each investee is recognized in the
non-operating income and expense classification in the consolidated
statements of income an accrual basis, after eliminating any
unrealized profits from transactions with the related companies.
In accordance with Chilean GAAP, the Company has evaluated
the recoverability of its foreign investments as required by Technical
Bulletins No. 33 of the Chilean Association of Accountants. The
Company has not identified impairments in the net book values of
its investments.
m)
Intangibles, other than goodwill
Intangibles, other than goodwill, correspond mainly to
easements, adjustments to carrying value for assets contributed
by the state of Chile upon incorporation of the Company, and rights
for the use of telephone lines and are amortized in accordance with
Technical Bulletin No.55 of the Chilean Association of Accountants.
n) Severance indemnities
The severance indemnity that the Company is obliged to pay to
its employees under collective bargaining agreements is stated at the
present value of the benefit under the vested cost method, discounted
at 6.5% (9.5% in 2003) and assuming an average employment span
which varies based upon years of service with the Company.
o) Revenue recognition
l)
Investments in related companies
Investments in related companies are included in “Other
assets” using the equity method. This valuation method recognizes
in income the Company’s equity in the net income or loss of each
investee on an accrual basis (Note 11).
Revenue consists of revenue for electric power generation and
distribution, among which is included energy supplied and unbilled
at each year-end, valued at the selling price using the current rates
which has been included in revenue from operations. The unbilled
amount is presented in current assets as trade receivables and the
corresponding cost is included in cost of operations.
Investments in foreign affiliates are recorded in accordance
with Technical Bulletin No. 64 of the Chilean Association of
Accountants.
The Company also recognizes revenues for amounts received
from highway tolls for motorized vehicles, income related to computer
advisory services, engineering services and sale of materials.
Under Technical Bulletin No. 64 of the Chilean Association
of Accountants, investments in foreign subsidiaries are price-level
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
130
p) Cost of sales and Administrative and selling
expenses
For classification purposes, cash flows from operations include
collections from clients and payments to suppliers, payroll and
taxes.
The cost of sales line item includes: purchased energy and
power, materials, fuel, tolls and energy transportation cost, direct
production salaries, productive assets depreciation, amortization,
and maintenance and operation cost. The administrative and selling
expense line item includes: general and administrative, materials and
office supplies, overhead salaries, bad debt expense, non-productive
assets’ amortization and depreciation.
q)
Income tax and deferred income taxes
At December 31, 2003 and 2004, the Company recorded
current tax expense according to the tax laws and regulations
in each country of ThCh$77,736,155, ThCh$103,272,006 and
ThCh$90,711,798, respectively and, additionally, it recorded in the
year’s income a deferred tax benefit of ThCh$60,662,022 in 2003 and
deferred tax expense of ThCh$46,529,409 in 2004. The Company
records deferred income taxes in accordance with Technical Bulletin
No.60 of the Chilean Association of Accountants, and with circular
No.1466 issued on January 27, 2000 by the SVS, recognizing, using
the liability method, the deferred tax effects of temporary differences
between the financial and tax values of assets and liabilities using
the tax rates estimated to be in effect at the time of reversal of the
temporary differences that gave rise to them.
r) Accrued vacation expense
In accordance with Technical Bulletin No.47 issued by the
Chilean Association of Accountants, employee vacation expense is
recorded on an accrual basis.
s) Reverse repurchase agreements
Reverse repurchase agreements are included in “Other current
assets” and are stated at cost plus interest and indexation accrued
at year-end, in conformity with the related contracts.
u) Financial derivative contracts
As of December 31, 2003 and 2004 the Company and its
subsidiaries have forward contracts, currency swaps, and interest
rate swaps and collars with several financial institutions, to hedge
against mainly foreign currency and interest risk exposures, which
are recorded according to Technical Bulletin No.57 of the Chilean
Association of Accountants. Forward foreign exchange contracts
gains and losses are recorded at estimated fair value with certain
gains and losses deferred as assets or liabilities until settlement if
the instrument qualifies as a hedge which are included in earnings
as “Other non-operating income and expense”.
v) Goodwill and negative goodwill
Goodwill and negative goodwill are determined according to
Circular No.368 of the SVS. Amortization is determined using the
straight-line method, considering the nature and characteristic of
each investment, foreseeable life of the business and investment
return, not to exceed 20 years.
As of December 31, 2003 and 2004 the Company evaluated
the recoverability of its goodwill and negative goodwill value arising
from investments abroad and under the guidance of Technical
Bulletin No.56 of the Chilean Association of Accountants, under IAS
36 “Impairment of Assets Value”, an impairment of goodwill and
negative goodwill was recorded (See Note 13).
w) Pension and post-retirement benefits
Pension and post-retirement benefits are recorded in
accordance with the respective collective bargaining contracts of
the employees based on the actuarially determined projected benefit
obligation.
t) Statements of cash flows
x) Bonds
The Consolidated Statements of Cash Flows have been prepared
in accordance with the indirect method.
Investments considered as cash equivalents, as indicated in
point 6.2 of Technical Bulletin No.50 issued by the Chilean Association
of Accountants, include time deposits, investments in fixed income
securities classified as marketable securities, repurchase agreements
classified as other current assets, and other cash balances classified
as other accounts receivable with maturities less than 90 days.
Bonds payable are recorded at the face value of the bonds.
The difference between the face value and the placement value,
equal to the premium or discount, is deferred and amortized over
the term of the bonds.
y)
Investments in other companies
Investments in other companies are presented at acquisition
cost adjusted for price-level restatement, as they do not trade in an
organized market.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
z) Research and development costs
N OTE 3. CHAN GE I N ACCO U NTI N G
131
PRI NCIPLES
•
•
As of January 1, 2004, the Superintendency of Securities
and Insurance, through Circular Letter 1697, has made
effective the adoption of Technical Bulletin 72 on Business
Combinations issued by the Accountants Association of Chile.
These regulations have been applied by the Corporation and
pertain to the nature of permanent investments and financial
statement consolidation.
Regarding indemnity for years of service, the Corporation
modified the discount rate from 9.5% in 2003 to 6.5% in
2004 and its workers’ estimated service lives, which are the
assumptions used to assess the said liabilities. These changes
resulted in the acknowledgment of a larger net charge of
ThCh$22,060 to income during the current fiscal year.
In addition, in the provision for post-retirement benefits,
the discount rate was also modified from 9.5% in 2003
to 6.5% in 2004, which resulted in a charge to income of
ThCh$3,411,293.
Costs incurred by the Company in research and development
relate mainly to water-level studies, hydroelectric research, and
seismic-activity surveys which are expensed as incurred. Costs
incurred in performing studies related to specific construction projects
are capitalized.
aa) Cost of share issue
Costs incurred to date associated with issuing and placing
shares are recorded according to the provisions of Circular No. 1370 of
1998 of the Superintendency of Securities and Insurance. The amounts
are deducted from the share premium account. A breakdown of the
costs is shown in Note 26.
ab) Litigation and other legal action
As of December 31, 2004, the Company has established accruals
for probable losses in the aggregate amount of ThCh$66,544,240,
including accruals Endesa-Chile has established in the amount of
ThCh$17,199,250. See Note 29 for detail of claims to which such
accruals relate to.
The Company has not recognized any assets for expected
recoveries, through insurance or from others, related to litigation
and other legal actions, in the periods presented. The Company
records such recoveries only in the case that it is virtually certain
such recoveries will be realized. In the case that the Company does
record expected recoveries, the Company’s policy is to record such
amounts as an asset in our consolidated balance sheet, unless a right
of offset clearly exists.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
132
N OTE 4. TIME D EP OSITS
Time deposits as of each year end are as follows:
Financial Institution
AVvillas
Bancafe
Banco Bilbao Vizcaya
Banco Colpatria
Banco Continental
Banco Crédito
Banco de Bogotá
Banco de Chile
Banco de Chile N.Y.
Banco de Occidente
Banco do Brasil
Banco do Estado do Ceará
Banco Frances
Banco Holandes
Banco Itau
Banco Interbank
Banco Lloyds
Banco Nationale de Paris
Banco Pactual
Banco Real
Banco Rio de la Plata
Banco Safra
Banco Santander
Banco Santander Santiago
Banco Santos
Banco Sudameris
Banco Tequendama
Banco Unión
Banco Votorantim
Bancolombia
Bank Boston
Bank of America
Bradesco
BTM
CDT
Citibank N.Y.
Citiliquit
Corficol S.A.
Corficolombiana
Corfinsura
Corfivalle
Corporacion las Villas
Encargo Fiduciario Banco Santander
FAM Fondo Ganadero
Fiduciaria Banco de Bogotá
Fiduciaria Banco Colpatria
Fiduciaria Bancolombia
Fiduciaria Helm Trust
Fiducolombia
Fiduoccidente
Fiduvalle
Granahorrar
HSBC - Bamerindus
Interbolsa S.A
Merril lynch
Panamericano
Porvenir
Pruential Securiti
Serfinco
Ford Motor
Suvalor
Otros
Total
2003
Annual
Rate %
Scheduled
Maturity
-
-
0.97%
9.35%
1.48%
-
-
05-01-04
02-01-04
06-01-04
-
-
10.50%
02-02-04
-
-
-
-
-
-
1.37%
1.37%
2.50%
3.75%
1.44%
0.70%
02-01-04
02-01-04
20-01-04
28-01-04
02-01-04
02-01-04
-
-
1.44%
1.39%
0.00%
1.59%
16.03%
1.51%
02-01-04
15-01-04
-
28-01-04
02-01-04
02-01-04
-
-
1.39%
15-01-04
-
-
8.50%
9.75%
1.39%
1.00%
0.80%
0.56%
1.38%
0.60%
02-01-04
01-03-04
15-01-04
05-01-04
02-01-04
05-01-04
15-01-04
02-01-04
-
-
0.53%
0.95%
9.66%
05-01-04
02-01-04
02-01-04
-
-
1.41%
1.70%
9.95%
6.51%
-
-
7.71%
7.37%
02-01-04
02-01-04
01-03-04
02-01-04
-
-
02-01-04
02-01-04
-
-
8.14%
02-01-04
-
-
7.08%
8.90%
1.39%
9.68%
0.60%
02-01-04
02-01-04
15-01-04
02-01-04
05-01-04
-
-
3.22%
0.20%
8.05%
02-01-04
30-01-04
02-01-04
-
-
9.10%
0.00%
02-01-04
02-01-04
2004
As of December 31,
Annual
Rate %
8.85%
7.79%
2.41%
8.15%
2.35%
5.43%
2.18%
1.85%
1.85%
1.80%
3.06%
1.47%
4.32%
1.46%
8.53%
2.16%
0.99%
3.54%
6.33%
1.20%
8.54%
9.22%
8.87%
1.47%
2.39%
2.95%
1.63%
7.07%
7.90%
2.93%
6.22%
9.03%
4.22%
8.38%
9.00%
8.43%
5.74%
6.73%
6.61%
6.74%
7.17%
6.52%
7.44%
Scheduled
Maturity
01-02-05
02-01-05
02-01-05
02-01-05
02-01-05
02-01-05
15-03-05
02-01-05
02-01-05
01-01-05
02-01-05
04-01-05
05-01-05
04-01-05
03-01-05
04-01-05
11-01-05
15-01-05
02-01-05
02-01-05
03-01-05
03-01-05
01-02-05
04-01-05
02-01-05
02-01-05
02-01-05
02-01-05
02-01-05
02-01-05
03-01-05
15-03-05
02-01-05
02-01-05
02-01-05
02-01-05
03-01-05
03-01-05
03-01-05
03-01-05
02-01-05
03-01-05
02-01-05
-
-
1.50%
7.98%
2.08%
18.65%
2.24%
7.15%
2.26%
8.16%
1.45%
02-01-05
02-01-05
02-01-05
01-01-05
02-01-05
02-01-05
02-01-05
02-01-05
04-01-05
2003
ThCh$
-
-
70,181,356
8,665,882
2,157,070
-
207,091
-
-
-
3,555,810
3,095,085
285,784
207,022
6,394
1,334,459
-
414,916
2,765,456
389,437
2,542,817
2,726,310
5,652,277
-
883,503
-
770,608
10,569,470
1,006,218
1,278,155
451,474
16,855,765
877,332
668,294
-
44,702,765
3,154,884
7,098,131
-
2,018,080
4,626,408
942,035
515,610
-
-
1,689
5,448,016
-
1,123,055
-
1,765,894
826,413
18,503,537
10,536,885
6,143,374
-
15,279,260
1,055,017
90,591
-
1,275,652
5,690
2004
ThCh$
11,150,382
10,456,693
87,359,136
18,833,799
3,974,531
6,651,891
16,649,142
3,605,027
2,669,945
4,376,923
969,133
2,033,720
544,812
-
89
-
4,198,449
3,971,546
-
82,545
2,572,288
-
14,317,288
91,074
-
3,638,640
4,409,737
2,133,337
3,760,980
38,144,067
456,676
8,189,878
3,411,044
-
806,955
75,880,376
435,601
-
8,325,719
25,566,873
13,251,647
-
1,566,442
1,442,306
153
187
49
70
4,116,116
81
8,285,231
-
3,770,473
6,436,913
4,231,326
107,475
439,323
-
80,741
5,590,056
29,273,086
2,483,888
262,660,971
450,743,859
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
133
N OTE 5. ACCO U NTS, N OTES AN D OTH ER RECEIVABLES
a) Current accounts, notes and other receivables and their related allowances for doubtful accounts as of each
December 31, are as follows:
As of December 31,
Account
Under 90 days
91 days to 1 year
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
Sub total
2004
ThCh$
Current
Long term
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
Account receivable
509,056,859 540,343,007
63,603,984
80,151,615
620,494,622 572,660,843
528,740,129
Allowance for doubtful accounts
(33,854,656)
(32,358,593)
(59,956,562)
(59,395,900)
(91,754,493)
(93,811,218)
Notes receivables
8,180,871
2,865,834
1,181,130
696,361
3,562,195
9,362,001
2,828,014
Allowance for doubtful accounts
(119,253)
(131,782)
(671,056)
(602,399)
(734,181)
(790,309)
-
-
-
-
Other receivables
53,789,172
60,662,368
51,543,183
12,152,586
72,814,954
105,332,355
63,814,202
134,743,490
128,766,346
Allowance for doubtful accounts
(2,848,919)
(1,386,054)
(5,934,313)
(7,614,698)
(9,000,752)
(8,783,232)
(3,610,070)
(2,856,257)
Total
583,970,440 595,382,345
131,133,420 125,910,089
b) Current and long-term accounts receivable per
country as of each December 31, are as follows:
Bad debt write-offs of ThCh$46,785,486 and ThCh$20,647,225
were recorded for the years ended December 31, 2003 and 2004,
respectively.
As of December 31,
d) Amounts of unbilled energy sold are as follows:
As of December 31,
2003
ThCh$
2004
ThCh$
Unbilled energy sold
160,391,143
177,603,778
Country
2003
2004
Chile
Perú
Argentina
Colombia
Brazil
Panamá
ThCh$
%
ThCh$
%
174,001,542
24.33%
155,832,458
21.60%
46,424,406
48,160,770
6.49%
6.73%
51,255,755
7.11%
58,060,262
8.05%
113,317,251
15.85%
128,009,533
17.75%
332,896,968
46.55%
323,506,255
44.85%
302,923
0.04%
4,628,171
0.64%
Total
715,103,860 100.00% 721,292,434 100.00%
c) Changes in provision for accounts receivables are
as follows:
Year ended December 31,
2003
ThCh$
2004
ThCh$
Balance at beginning of period
119,415,603 106,994,829
Additions charged to costs and expenses
37,639,977
16,262,434
Deductions
Other
(46,785,486)
(20,647,225)
(3,275,265)
1,735,645
Balance at end of period
106,994,829 104,345,683
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
134
N OTE 6. TR ANSAC TI O NS WITH REL ATED COMPAN IES
The balances of accounts receivable and payable with related companies are as follows at December 31, 2003 and 2004:
a) Notes and accounts receivable due from related companies:
Company
Aguas Santiago Poniente S.A.
Atacama Finance Co.
CGTF Fortaleza
Cía. Interconexión Energética S.A.
Com. de Energía del Mercosur S.A.
Consorcio Energetico Punta Cana-Macao
Distrilec Inversora S.A.
Elesur S.A.
Empresa Eléctrica de Bogotá S.A.
Empresa Eléctrica Piura S.A.
Endesa España
Endesa Internacional S.A.
Etevensa
Fundación Endesa
Consorcio Ingendesa - Minmetal Ltda.
Gas Atacama Generación Ltda.
Gasoducto Atacama Chile
Gasoducto Tal Tal Ltda.
Gas Atacama S.A.
Sociedad Consorcio Ara Ltda.
Consorcio Ara-Ingendesa Ltda.
Inversiones Electricas Quillota S.A.
Sacme
Smartcom S.A.
Soc. de Inv. Chispa Uno S.A.
Transmisora Eléctrica de Quillota Ltda.
As of December 31,
Short-term
Long-term
2003
ThCh$
592,954
1,952,594
148,215
2,736,733
5,185,378
962
6,146
27,996
35,294
33,242
-
1,311,402
96,106
38,885
-
30,592
126,609
-
2,681,081
-
463,413
2,050
90,728
1,610,360
2,023
313,865
2004
ThCh$
-
106,087,173
34,419
1,687,332
3,311,018
-
-
-
-
52,796
543,797
352,336
63,562
58,960
15,715
27,967
193,193
75,087
-
13,425
201,639
2,000
82,739
1,273,859
-
2003
ThCh$
-
131,389,523
-
159,325
-
-
-
-
-
-
-
2004
ThCh$
-
-
-
38
-
-
-
-
-
-
-
173,476
122,111
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
-
-
-
-
-
-
-
-
-
-
308,746
609,105
304,097
Total
17,486,628
114,385,763
132,331,429
456,246
b) Notes and accounts payable due to related companies:
Company
Aguas Santiago Poniente S.A.
Cía. Interconexión Energética S.A.
Cía. de Transmisión del Mercosur S.A.
CGTF Fortaleza
Com. de Energía del Mercosur S.A.
Electrogas S.A.
Elesur S.A.
Empresa Eléctrica de Bogotá S.A.
Empresa Eléctrica Piura S.A.
Endesa Internacional S.A.
Endesa Servicios
Sacme
Smartcom S.A.
Transmisora Eléctrica de Quillota Ltda.
As of December 31,
Short-term
2003
ThCh$
6
21,464,496
1,033,586
3,274,017
584,044
199,325
136,489
2,930,452
394,992
1,230,151
98,284
115,123
32,644
23,391
2004
ThCh$
-
8,864,648
178,592
14,436,127
239,536
207,713
-
-
476,526
56,725,083
-
107,332
247,699
25,419
Long-term
2003
ThCh$
2004
ThCh$
-
-
-
-
-
-
-
86,428
-
-
-
-
-
-
Total
31,517,000
81,508,675
86,428
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
135
c)
The most significant transactions and their effects in income (expense) for each year ended December 31 are as follows:
Company
Relationship
Nature of transaction
Aguas Santiago Poniente S.A.
Atacama Finance Co.
CGTF Fortaleza
Cía. Interconexión Energética S.A.
Consorcio ARA-Ingendesa
Consorcio Ingendesa Minmetal Ltda.
Com. de Energía del Mercosur S.A.
Affiliate
Affiliate
Affiliate
Affiliate
Affiliate
Affiliate
Affiliate
Com. Transmisión del Mercosur S.A.
Empresa Eléctrica de Bogotá S.A.
Elesur S.A.
Affiliate
Affiliate
Parent company
Empresa Eléctrica Piura S.A.
Member of Controling Group
Electrogas S.A.
Endesa España
Endesa Internacional S.A.
Endesa Servicios
Empresa Propietaria de la Red
Etevensa
Fundación Endesa
Gasoducto Atacama Generación Ltda.
Gas Atacama S.A.
Ingendesa do Brasil
Ingendesa Argentina
Sacme
Smartcom S.A.
Affiliate
Parent company
Parent company
Member of Controling Group
Affiliate
Member of Controling Group
Member of Controling Group
Affiliate
Affiliate
Member of Controling Group
Member of Controling Group
Affiliate
Member of Controling Group
Soc. de Inv. Chispa Uno S.A.
Transmisora Eléctrica de Quillota Ltda.
Affiliate
Affiliate
Interest
Services
Interest
Monetary correction
Exchange difference
Services
Purchase of energy
Sale of energy
Purchase of energy
Interest
Services
Exchange difference
Services
Services
Sale of energy
Purchase of energy
Interest
Services
Purchase of energy
Exchange difference
Interest
Monetary correction
Services
Sale of energy
Purchase of energy
Services
Services
Exchange difference
Services
Interest
Services
Services
Sale of energy
Services
Services
Services
Exchange difference
Services
Services
Services
Services
Interest
Services
Interest
Monetary correction
Services
2003
Income
(Expense)
ThCh$
22,681
15,538
5,678,768
1,781,235
(29,716,443)
1,172,958
(3,205,624)
21,942,261
(51,820,568)
68,202
56,239
2004
Income
(Expense)
ThCh$
-
-
6,406,649
2,982,447
(10,276,468)
327,731
(86,270,164)
19,198,528
(54,004,303)
7,961
63,218
-
2,129,021
-
20,487,600
(2,178,949)
-
2,572,199
61,141
19,487,819
(743,739)
-
-
18,812
(2,109,564)
(2,202,686)
(9,499,614)
(16,067,616)
36,638
500,996
(4,914,658)
98,805
(2,681,022)
-
130,312
(193,724)
(125,814)
153,139
2,269,437
131,248
-
80,661
-
(25,564)
-
(316,289)
3,853,485
-
8,731
109,927
25,351
131,501
18,266
(2,166,614)
-
-
-
-
125,823
(4,762,242)
125,122
(2,674,409)
(27,935)
71,854
(141,997)
-
-
1,520,132
637,234
34,937
1,727
(127,613)
-
7,262
(334,279)
3,721,375
32,300
2,911
81,104
57,305
85,307
(64,154,589)
(103,899,411)
The transfer of short-term funds between related companies, is on the basis of a current cash account, at a variable interest rate based
on market conditions. The resulting accounts receivable and accounts payable are essentially on 30 day terms, with automatic rollover
for the same year and settlement in line with cash flows.The transfer of short-term funds between related companies, is on the basis of a
current cash account, at a variable interest rate based on market conditions. The resulting accounts receivable and accounts payable are
essentially on 30 day terms, with automatic rollover for the same year and settlement in line with cash flows.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
136
Detail of the long-term payables / receivables is as follows:
Company
Type
Transmisora Eléctrica de Quillota Ltda.
Account receivables
Due Date
2006
Capital in
original
currency
35,389.57
Currency
U.F.
Interest
rate
9.00%
N OTE 7. I NVENTO RIES
N OTE 8. D EFERRED I NCOME TA XES
Inventories include the following items and are presented net
of an allowance for obsolescence amounting to ThCh$2,750,729 and
ThCh$3,017,626 as of December 31, 2003 and 2004, respectively:
As of December 31,
2003
ThCh$
2004
ThCh$
Real estate under development
16,561,003
15,702,906
Materials in transit
138,683
188,414
Operation and maintenance material
22,602,565
25,375,082
a)
Income taxes (recoverable) payable as of each year-
end are as follows:
As of December 31,
2003
ThCh$
2004
ThCh$
Income tax provision - current
49,036,057
54,418,780
Recoverable tax credits
(62,818,496)
(97,637,872)
Total
(13,782,439)
(43,219,092)
Fuel
Others
Total
6,113,564
9,714,913
84
-
b) The balance of tax retained losses and the related
45,415,899
50,981,315
tax credits are as follows:
Year
2003
2004
Amount of loss
ThCh$
204,685,253
239,949,691
Credit
ThCh$
-
-
c) The net effect of recording the deferred tax
expense (benefit) was ThCh$(60,662,022) and
ThCh$46,529,409 during the years ended
December 31, 2003 and 2004, respectively.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
137
d)
In accordance with BT No.60 and 69 of the Chilean Association of Accountants, and Circular No.1,466 of the
SVS, the Company and its subsidiaries have recorded consolidated deferred income taxes as of December 31,
2003 and 2004 as follows:
As of December 31, 2003
As of December 31, 2004
Asset
Liability
Asset
Description
Allowance for doubtful accounts
Deferred income
Vacation accrual
Intangibles
Fixed assets depreciation
Severance indemnities
Other
Contingencies
Bond discount
Cost of studies
Finance cost
Imputed interest on construction
Deferred charges
Actuarial deficit (Brazil)
Withholdings
Obsolescence
Materials used
Imputed salaries on construction
Tax losses
Provision real state project
Sie2000A project
Provision for employee benefits
Derivative contracts exchange difference
Operating fees
Energy in measurers
Regulated assets
Capitalized expenses
Capitalized interest
Valuation allowance
Provisión de valuación
Short-term
ThCh$
9,441,712
1,532,249
789,056
73,815
150
-
2,898,399
8,136,524
-
-
-
-
1,900,849
-
-
291,011
-
-
30,731,646
-
-
1,123,988
-
5,106,050
-
-
-
-
(62,409)
-
Long-term
ThCh$
19,715,261
5,493,647
-
-
3,159,481
-
1,000,934
46,100,903
-
-
-
-
2,800,215
12,070,233
-
656,893
-
3,899,439
100,373,330
2,944,849
-
3,236,528
312,837
-
-
-
-
-
(21,776,753)
(2,685,345)
Short-term
ThCh$
Long-term
ThCh$
-
-
-
-
-
-
12,703
1,540
93,135 364,000,349
1,953,906
5,331,865
-
1,789,264
8,180,400
10,904,732
4,664,007
2,805,349
-
1,249
-
973,913
-
-
-
183,201
-
-
-
-
13,555,320
637,484
1,449,633
(231,934,818)
-
-
845,581
-
112,726
-
-
-
1,799,379
-
5,864
-
-
-
-
-
-
540
989,222
-
2,798,986
2,282,623
-
-
(1,630)
-
Short-term
ThCh$
8,592,885
1,093,988
902,749
-
-
-
925,843
5,733,922
-
-
-
-
3,209,755
-
-
295,228
-
-
42,778,937
-
-
1,478,806
1,615,743
3,736,278
-
-
-
-
-
-
Long-term
ThCh$
20,367,584
1,376,969
-
-
2,893,469
-
897,198
46,244,921
-
-
-
-
-
12,028,415
-
647,679
-
3,632,328
81,877,301
2,528,523
-
2,689,410
-
-
-
-
-
-
(17,495,723)
(2,935,126)
Liability
Short-term Long-term
ThCh$
ThCh$
-
-
-
-
139,345
-
258,881
-
135,394
-
-
-
619,552
-
-
-
-
-
-
-
-
-
-
-
2,419,644
6,785,601
-
-
-
-
-
-
-
-
386,542,008
1,886,652
3,041,781
-
1,701,307
8,107,213
12,982,334
4,293,140
3,384,371
-
-
-
895,914
-
-
-
277,684
-
-
-
-
7,873,283
556,006
1,899,692
(215,152,549)
-
Total
61,963,040 177,302,452 8,939,129 184,497,394 70,364,134 154,752,948 10,358,417 218,288,836
e)
Income tax benefit (expense) for the year ended
N OTE 9. OTHER CU RRENT ASSE TS
December 31, 2003 and 2004 is as follows:
Other current assets are as follows:
Item
As of December 31,
2003
ThCh$
2004
ThCh$
Current income tax expense:
Income tax provision
Adjustment for tax expense - prior year
(103,270,325)
(1,681)
(91,392,576)
680,778
Deferred tax expense (benefit):
Deferred taxes
Benefits for tax losses
Amortization of complementary accounts
Valuation allowance
52,463,456
29,492,226
(21,254,071)
(39,589)
(48,266,851)
16,171,969
(14,395,636)
(38,891)
Total
(42,609,984)
(137,241,207)
Forwards contracts and swap (1)
Guaranties and indemnities
Deferred expenses
Post-retirement benefits
Deposits for commitments and guarantees
Bond discount
Recoverable - taxes
Fair value derivatives contracts
Reverse repurchase agreements (2)
Others
Total
(1)
See detail in Note 29.
As of December 31,
2003
2004
ThCh$
ThCh$
11,196,734
81,507
2,430,634
208,760
6,779,838
2,617,127
886,918
233,837
12,976,213
4,023,170
740,663
926,826
2,413,745
-
159,867
1,206,465
36,371,190 25,585,039
2,281,047
774,602
75,777,002 36,117,180
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
138
(2) The detail of reverse repurchase agreements is as follows:
Code
Date
Start
End
Financial institution
Currency
Document
As of December 31, 2004
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
VRC
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
29-Dec-04
30-Dec-04
30-Dec-04
30-Dec-04
30-Dec-04
30-Dec-04
30-Dec-04
30-Dec-04
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
6-Jan-05
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
Valores Security S.A. C.B.
BBVA Banco BHIF
Banco Central de Chile
BBVA Banco BHIF
Banco Central de Chile
Scotiabank
Banco de Chile
Banco Crédito e Inversiones
Banco Santander Santiago
BBVA Banco BHIF
Banco Central de Chile
U.F.
U.F.
U.F.
U.F.
U.F.
U.F.
U.F.
U.F.
U.F.
$
$
$
$
$
$
$
$
$
$
D.P.R.
D.P.F.
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
BONO
D.P.R.
CERO
D.P.F.
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
B.C.D.
Interest
rate
%
0.33%
0.33%
0.33%
0.33%
0.33%
0.33%
0.33%
0.33%
0.37%
0.33%
0.33%
0.33%
0.12%
0.12%
0.12%
0.12%
0.12%
0.12%
0.09%
Current
amount
ThCh$
1,717,533
202,755
55,192
1,744,373
801,429
2,633,534
5,029,012
1,724,914
683,467
633,722
8,044
6,554,416
2,954
1,014,928
1,609,100
247,911
413,855
70,887
437,013
Nominal
ThCh$
1,717,190
202,710
55,189
1,743,989
801,289
2,633,052
5,027,775
1,724,822
683,315
633,583
8,043
6,552,973
2,954
1,014,887
1,609,036
247,901
413,838
70,885
437,000
Fair value
ThCh$
1,717,190
202,710
55,189
1,743,989
801,289
2,633,052
5,027,775
1,724,822
683,315
633,932
8,048
6,556,578
2,955
1,015,049
1,609,294
247,941
413,904
70,895
437,092
Total
25,585,039 25,580,431 25,585,019
Code
Date
Start
End
Financial institution
Currency
Document
As of December 31, 2003
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
23-Dec-03
23-Dec-03
23-Dec-03
23-Dec-03
23-Dec-03
23-Dec-03
23-Dec-03
23-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
30-Dec-03
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
5-Jan-04
2-Jan-04
2-Jan-04
2-Jan-04
2-Jan-04
2-Jan-04
2-Jan-04
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BBVA C. Bolsa BHIF S.A.
BCI C. Bolsa S.A.
BCI C. Bolsa S.A.
BCI C. Bolsa S.A.
BCI C. Bolsa S.A.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
Bancoestado S.A. C.B.
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Bono
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
D.P.R.
Bono
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.R.
D.P.R.
D.P.R.
P.D.B.C.
CERO
D.P.F.
L.H.
L.H.
L.H.
L.H.
L.H.
D.P.R.
D.P.R.
D.P.R.
D.P.R.
D.P.F.
Interest
rate
%
0.27%
0.27%
0.27%
0.27%
0.27%
0.27%
0.27%
0.27%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.26%
0.20%
0.20%
0.25%
0.25%
0.25%
0.25%
0.27%
0.27%
0.27%
0.27%
0.27%
0.27%
Current
amount
ThCh$
42,724
3,841
421,456
206,237
4,741,262
14,196,210
615,915
287,115
56,495
3,536
1,321,736
942,221
934,593
356,103
1,415,315
827,627
212,450
109,303
1,434,904
313,921
2,282
276,947
412,299
4,546,358
313,226
19,404
21,198
405,915
180,590
1,120,153
612,375
17,480
Nominal
ThCh$
42,693
3,838
421,153
206,089
4,737,850
14,185,996
615,473
286,909
56,490
3,536
1,321,622
942,140
934,512
356,073
1,415,192
827,555
212,431
109,293
1,434,779
313,894
2,282
276,928
412,265
4,545,979
313,199
19,402
21,196
405,878
180,574
1,120,051
612,321
17,480
Fair value
ThCh$
42,724
3,841
421,456
206,237
4,741,262
14,196,210
615,915
287,115
56,495
3,536
1,321,736
942,221
934,593
356,103
1,415,315
827,627
212,450
109,303
1,434,904
313,921
2,282
276,947
412,299
4,546,358
313,226
19,404
21,198
405,915
180,590
1,120,153
612,375
17,480
Total
36,371,191 36,355,073
36,371,191
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
139
N OTE 10. PRO PERT Y, PL ANT AN D EQ U IPMENT
The composition of property, plant and equipment is as follows:
Land
Buildings and infrastructure
Distribution and transmission lines and public lighting
Less: third party contributions
Sub-total
Machinery and equipment
Work in progress
Construction materials
Leased assets (1)
Furniture and fixtures, tools, and computing equipment
Vehicles
Equipment in transit
Other assets
Sub-total
Technical appraisal
Buildings and infrastructure
Machinery and equipment
Other assets
Total technical appraisal
As of December 31,
2003
ThCh$
118,340,129
2004
ThCh$
122,606,995
5,863,335,494
4,481,745,419
(39,796,311)
5,643,213,439
4,284,173,352
(62,401,125)
Useful life
range
Years
-
20-40
20-50
20-50
10,305,284,602
9,864,985,666
1,806,292,572
1,721,120,263
162,981,726
52,718,519
630,715
78,199,053
14,053,161
6,354,622
41,854,140
180,102,817
44,425,890
28,302,652
84,235,650
11,609,898
5,976,374
44,056,038
356,791,936
398,709,319
4-20
-
4-10
4-10
4-10
4-10
4-10
4-10
515,562,792
119,176,041
219,178
474,816,497
109,165,816
200,725
20-50
4-20
4-10
634,958,011
584,183,038
Total property plant and equipment
13,221,667,250 12,691,605,281
Accumulated depreciation at beginning of year
Buildings and infrastructure
Machinery and equipment
Other assets
(3,751,141,037)
(582,125,634)
(45,503,524)
(3,822,180,291)
(609,407,810)
(48,287,346)
Accumulated depreciation at beginning of year
(4,378,770,195)
(4,479,875,447)
Accumulated depreciation at beginning of year technical appraisal
Buildings and infrastructure
Machinery and equipment
Other assets
(89,603,788)
(47,872,874)
(324,851)
(96,979,993)
(50,160,670)
(276,063)
Total accumulated depreciation at beginning of year technical appraisal
(137,801,513)
(147,416,726)
Depreciation of the year
(406,326,019)
(379,491,166)
Total accumulated depreciation at end of year
(4,922,897,727)
(5,006,783,339)
Total property, plant and equipment, net
8,298,769,523
7,684,821,942
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
140
Depreciation expense of the three years ended December 31,
2004 has been allocated as follows:
policies are recorded in prepaid and charged to income open the
life of the policy.
2003
ThCh$
2004
ThCh$
Cost of sales
392,468,621
365,465,613
Administrative and selling expenses
13,857,398
14,025,553
Total
406,326,019 379,491,166
(1) Corresponds to a contract for power transmission lines and installations
(Ralco-Charrúa 2X220 KV) between Empresa Nacional de Electricidad
S.A. and Huepil S.A. The said contract has a 20-year validity and earns
interest at a 6.5% annual rate.
As of December 31, 2004, the total leasing obligation, amount to
ThCh$24,384,379, which respective parts are presented in other
current liabilities and other long-term liabilities.
•
The Company and its foreign subsidiaries have insurance contracts
that include blanket, earthquake, and machinery failure policies
up to a MUS$100,000 limit. This coverage includes losses due to
business interruption. Premiums prepaid associated with these
• At December 31, 2003 and 2004 Enersis S.A. and its local
subsidiaries have carried out an analysis of the book values of
their property, plant and equipment and of the companies in
which it has invested abroad. The analysis consisted of evaluating
both the recoverability of property, plant and equipment of these
companies, and the recorded goodwill and negative goodwill,
in accordance with accounting principles generally accepted in
Chile.
The property, plant and equipment recoverability analysis, as
explained in Note 2h, was carried out considering that when there
is evidence that the company’s operations do not have sufficient
earnings to recover all costs, including the depreciation of property,
plant and equipment taken as a whole, and when the book value
of said assets exceeds its realization value, these values must be
written down to recoverable amounts, charging non operating
income.
The results of this analysis determined that no adjustments
affecting the Company and its Subsidiaries’ book values of
property, plant and equipment were required.
N OTE 11. I NVESTMENT I N REL ATED COMPAN IES
a)
Investments in related companies of December 31, 2003 and 2004 are as follows:
Related Companies
Number
of shares
Percentage
owned
Shareholders’ equity
of investee
Net income
of investees
2003
(6)
2004
(6)
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
Investment book value
2003
ThCh$
2004
ThCh$
Cía. de Interconexión Energética S.A. (2)
128,270,106
45.00%
45.00%
124,924,385 117,397,915
25,378,061 14,321,278
11,420,128
6,444,575
56,215,972 52,829,062
Atacama Finance Co. (7)
Endesa Market Place (4)
Sacme
Electrogas S.A.
Consorcio ARA- Ingendesa
Sociedad Consorcio Ingendesa Ara Ltda (1)
Consorcio Ingendesa - Minmetal Limited (1)
Gas Atacama Generación S.A. (7)
Gasoducto Atacama Argentina S.A. (7)
Gasoducto Atacama Chile S.A. (7)
Inversiones Eléctricas Quillota S.A.
Inversiones Electrogas S.A.
-
-
-
0.05%
0.05%
0.05%
608,676
50.00%
425
42.50%
Cía. de Energía del Mercosur S.A. (3)
6,305,400
45.00%
Transmisora Eléctrica de Quillota Ltda.
-
50.00%
3,150,000
-
0.00%
0.00%
0.05%
0.05%
0.05%
50.00%
42.50%
45.00%
50.00%
0.00%
0.00%
60,740,108 54,312,421
3,340,051
(1,313,660)
55,910,966 56,562,027
1,512,741
5,358,497
52,736,881
59,830,121
5,425,624 11,533,433
1,670
756
2,713
(657)
2,679
5,767
30,370
27,956
26,368
27,156
28,281
29,915
22,545,505 26,253,719
6,744,947
7,099,149
3,372,471
3,549,575
11,272,753 13,126,860
19,267,163
18,101,389
6,003,335
4,910,202
2,551,417
2,086,836
8,188,544
7,693,090
7,901,478
8,523,313
1,389,582
1,287,102
625,312
579,196
3,555,666
3,835,491
5,527,265
5,764,453
318,087
257,389
159,044
128,695
2,763,633
2,882,227
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,000
50.00%
50.00%
88,275
80,420
14,637
(52)
85
0.02%
0.02%
17,699,641 16,662,557
6,115,066
5,029,745
7,319
1,300
(26)
1,069
44,138
40,210
3,760
3,541
-
50.00%
50.00%
-
50.00%
50.00%
50.00%
50.00%
-
3,409
10,726
82,174
-
-
9,726
80,055
127,379
533,523
103,294
405,602
51,648
202,801
63,689
266,762
-
-
4
4,863
40,028
143
-
1,705
1,940
5,363
41,087
1,919
Gas Atacama S.A.
1,147
0.00%
0.00%
169,074,616 167,326,512
395,459
12,487,171
Inversiones Gas Atacama Holding Ltda. (7)
-
50.00%
50.00%
169,072,670 167,323,954
(487,299) 12,486,274
(243,650)
6,243,137
84,536,335 83,661,977
Central Geradora Termelectrica Fortaleza S.A. (5)
20,246,908
48.82%
48.82%
34,295,929 55,289,063
- 24,287,590
- 11,857,202
16,743,272 26,992,121
Ingendesa do Brasil Limitada
Distrilec Inversora S.A.
-
4,416,141
0.00%
0.00%
0.00%
0.00%
-
8,900
Aguas Santiago Poniente S.A. (5)
1,031,949
55.00%
55.00%
2,247,406
-
-
-
-
8,900
-
-
-
-
-
4,584
-
-
-
-
-
4,584
1,236,073
-
-
-
Total
17,954,716 31,145,883
184,716,758 191,465,062
Equity method investee:
(1) Related companies of subsidiary Ingendesa Ltda.
(2) Related companies of subsidiary Compañía Eléctrica Cono Sur S.A.
(3)
Related companies of subsidiary Endesa Argentina S.A.
(4) Company with negative equity in 2003 and 2004.
(5) These subsidiaries were in the development stage for the years shown and accordingly,
were not consolidated under Chilean GAAP.
(6) The ownership percentage represents the nominal interest held in the related party.
(7) See Note 11 (d).
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
141
b)
Income and (losses) recognized by Enersis S.A. based on
the participation in the related companies as of December
31, 2004, amounted to ThCh$31,146,566 (ThCh$683),
ThCh$18,198,366 (ThCh$243,650) in 2003.
c)
In accordance with Technical Bulletin No.64 of the Chilean
Association of Accountants for the years ended December 31,
2003 and 2004, the Company has recorded foreign exchange
gains and losses on liabilities related to net investments in
foreign countries that are denominated in the same currency
as the functional currency of those foreign investments. Such
gains and losses are included in the cumulative translation
adjustment account in shareholders’ equity, and in this way,
act as a hedge of the exchange risk affecting the investments.
As of December 31, 2004 the corresponding amounts are as
follows:
Company
Edesur S.A.
Companhia de Eletricidade do Río de Janeiro
Investluz S.A. (Coelce)
Central Hidroeléctrica Betania S.A.
Cachoeira Dourada S.A.
Edegel S.A.
Cía. Interconexión Energética S.A.
Hidroeléctrica El Chocón S.A.
Comercializadora de Energia del Mercosur S.A.
Central Costanera S.A.
Total
d)
The investments in related companies made by Enersis S.A. and
its affiliates for the years ended December 31, 2003 and 2004,
amounted to ThCh$3,061,889 and ThCh$343,959, respectively,
which are detailed as follows:
Company
Central Eléctrica Cachoeira Dourada S.A.
Central Costanera S.A.
Elesur S.A.
As of December 31,
2003
ThCh$
25,380
3,036,509
2004
ThCh$
-
-
-
343,959
Total
3,061,889
343,959
Country
of origin
Argentina
Brasil
Brasil
Colombia
Brasil
Perú
Brasil
Argentina
Argentina
Argentina
Investment
ThCh$
180,857,743
259,065,626
27,346,437
332,514,494
333,881,589
165,115,398
52,829,062
167,982,348
3,835,491
92,936,967
Reporting
currency
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
Liability
ThCh$
134,672,035
206,558,046
14,025,863
254,029,968
326,329,745
97,236,037
40,240,941
77,797,288
2,514,714
56,035,228
1,616,365,155
1,209,439,865
e) Capital increase in Cerj
On December 10, 2002, the E x traordinar y General
Shareholders’ Meeting of the Company Cerj agreed to an increase
in its authorized capital for an approximate total amount of
MUS$105.000.
On January 6, 2003, the companies Endesa Internacional,
Endesa Internacional Energía, Chilectra S.A. assigned 100% of the
rights of share subscription of the company Cerj and part of the rights
of Luz de Río S.A. to Enersis, for no consideration.
A capital increase was made on January 10, 2003 through the
issuance and the subscription of 770,833,333,333 ordinary shares, at
a value of R$0.48 by lot of thousand shares totaling the US$100,000
million approved by the Meeting and increasing the authorized capital
of the Company to US$259,085 million.
After this capital increase, the percentage of direct and indirect
participation held by Enersis S.A. and subsidiaries increased from
61.9521% to 71.8148%.
On December 11, 2003, the Compañía de Electricidade do
Rio de Janeiro S.A. shareholders extraordinary assembly was held,
which approved a capital stock increase of an approximate value of
MUS$250,000.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
142
The capital stock increase for the Compañía de Electricidade
do Rio de Janeiro S.A. was entered into on February 27, 2004, for
MR$710,000 (around MUS$243,000), at an equivalent of R$0.53
per one thousand share lot (1,000 shares).
The number of shares issued was 1,339,622,641,509 of which
the subsidiary Enersis Internacional S.A., through a inter-company
debt equity conversion subscribed to a total of 1,339,620,447,234
shares in two stages: 1,335,849,056,604 on February 27, 2004, and
3,771,390,630 on March 24, 2004.
On March 30, 2004, Enersis Internacional S.A. transferred
760,255,861,477 shares to Chilectra S.A. so that the latter could
maintain its relative ownership interest in the same proportion as
before the increase.
h) Group Reorganization
On December 1, 2003 the firm names of subsidiaries Gasoducto
Atacama Chile Limitada, Gasoducto Atacama Argentina Limitada and
Gas Atacama Generación Limitada were amended by public deeds
and changed to Gasoducto Atacama Chile S.A., Gasoducto Atacama
Argentina S.A. and Gas Atacama Generación S.A., respectively.
On December 29, 2003 our subsidiary, Compañía Eléctrica
Cono Sur S.A. transferred to our related party GasAtacama S.A. all
our shares held in Atacama Finance for US$4,400,000 as part of a
reorganization of our natural gas business holding (Note 23)
On December 29, 2003, Compañía Eléctrica Cono Sur S.A.
transferred to GasAtacama S.A. its 50% interest in Energex Co. for
US$5,000 as part of the above reorganization. (Note 23)
With this operation, Enersis S.A. and its subsidiaries direct and
indirect ownership interest percentage increased from 71.8148% to
80.4141% in Compañía de Electricidad de Río de Janeiro S.A.
i)
According to Technical Bulletin 72 of the Accountants
Association of Chile A.G., for this transaction carried out in companies
of the same group, a reserve of ThCh$11,992,130 has been recorded
in equity representing a contribution to capital (see Note 22 f.)
f)
Sale of Río Maipo
The contract between Enersis and Compañía General de
Electricidad - Distribución was signed on April 30, 2003 to seel the
entire share participation held by Enersis (356.078.645 shares) in
the Company Río Maipo.
The disposal of Rio Maipo to Company CGE Distribución was
approved by the Board of Directors of Enersis on March 28, 2003,
with a bid of US$170 million for the shares held by Enersis which
was later ratified at an Extraordinary Shareholders Meeting dated
March 31, 2003. The effects of the sale of the shares are detailed
in Note 23.
g) Sale of Infraestructura 2000 S.A.
On June 23, 2003, Endesa Chile S.A. sold 330,939,522
shares of the subsidiary Infraestructura 2000 S.A. in the amount
of ThCh$40,074,506 and 3,741 shares of Sociedad Concesionaria
Autopista del Sol S.A., in the amount of ThCh$41,151 which amounts
represent 100% of its participation in these related Companies (Note
23).
Merger of Inmobiliaria Manso de Velasco Limitada and
Sociedad Agrícola el Gobernador Limitada. Partners of these
Companies agreed by public deed dated December 31, 2003 to
a merger by absorption of Inmobiliaria Manso de Velasco into
Constructora el Gobernador Ltda., which, for all legal intents
and purposes, became the successor, changing its name as
of that date to Inmobiliaria Manso de Velasco Limitada. As a
result of this merger, the predecessor Inmobiliaria Manso de
Velasco Ltda. was dissolved, and its partners received rights
in the continuing Company.
j)
Dissolution of Investment Vehicles. During 2003, Companys
Enersis Energía de Colombia S.A. and Enersis de Argentina S.A.
were dissolved.
k)
Incorporation of Companies
On October 1, 2003 Inversiones Gas Atacama Holding Limitada
was incorporated by public deed; Inversiones Endesa Norte S.A.
contributed ThCh$700,000 in cash and 99.99% of its ownership
rights in Gasoducto Atacama Chile Limitada, Gasoducto Atacama
Argentina Limitada and Gas Atacama Generación Limitada, which
represent 49.95% of all its rights in the aforementioned affiliates,
in return of a 50% interest in the Company. The transaction was
recognized at historical carrying, values as a reorganization of the
group interest in its natural gas business.
l)
Purchase of Elesur S.A.
On May 27, 2004, Enersis S.A. purchased 49,207,343 shares
with no par value from Endesa International S.A., equivalent to
99.9989% of Elesur S.A. partnership assets. The price agreed upon
for the transaction was ThCh$55,551,601.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 12. INVESTMENTS IN OTHER COMPAN IES
Investments in other companies at December 31, 2003 and 2004 are as follows:
143
Company
Electrificadora de la Costa
Electrificadora del Caribe
Autopista del Río Maipo S.A.
CDEC-SIC Ltda.
CDEC-SING Ltda.
Club de la Banca y Comercio
Club Empresarial
Cooperativa Eléctrica de Chillán
Emgesa S.A.
Edegas
Distasa S.A.
Empresa Eléctrica de Aysen S.A.
Empresa Eléctrica de Bogotá S.A. (1)
Financiera Eléctrica Nacional S.A.
Inmobiliaria España S.A.
Inverandes S.A.
Menescal Produciones Artisticas
Prod. Cinematográfica
Saelpa
Teleceara
Telebras
Total
(1) See Note 14 (1).
N OTE 13. G O O DWILL
Number
of shares
13,590,296
85,568,116
25
-
-
1
1
-
1
1
1
2,516,231
9,293,241
4,072
1
-
-
-
-
-
-
Percentage
owned
%
0.19%
0.06%
As of December 31,
2003
ThCh$
27,137
1,376,666
2004
ThCh$
24,852
1,331,547
-
-
-
23.16%
7.69%
1.00%
1.00%
-
-
1.00%
-
-
7.19%
0.10%
-
-
-
-
-
-
-
173,229
103,171
1,994
6,447
13,363
-
-
-
2,047,755
132,805,731
111,723
100
3,541
52,730
25,280
1,980
1,409
44,548
213,764
103,171
2,245
5,486
13,363
-
-
-
2,047,755
46,053,558
115,694
-
-
52,562
25,200
1,974
1,405
178
136,796,804
49,992,754
a)
In accordance with current standards, recognition has been given to the excess of purchase price of the proportional equity in the net
assets acquired (goodwill) in the purchase of shares as of December 31, 2003 and 2004, as follows:
Chilectra S.A.
Codensa S.A.
Edegel S.A.
Emgesa S.A.
Empresa Eléctrica de Colina S.A.
Empresa Eléctrica Pangue S.A.
Empresa Nacional de Electricidad S.A.
Gasoducto Atacama Chile Ltda.
Inversiones Distrilima S.A.
Luz de Bogotá S.A.
As of December 31,
Amortization
Net Balance
2003
ThCh$
(6,434,838)
(1,514,390)
(34,742)
(1,368,842)
(191,714)
(173,156)
(44,472,559)
(4,941)
(1,270)
(362,491)
2004
ThCh$
(6,434,768)
(637,605)
(31,818)
(1,253,592)
(191,717)
(173,156)
(44,472,559)
(4,941)
(1,164)
-
2003
ThCh$
103,587,929
19,434,925
480,607
18,933,729
2,444,373
3,217,820
646,704,395
74,934
13,976
5,014,460
2004
ThCh$
97,153,161
12,276,827
408,325
16,086,006
2,252,656
3,044,664
602,231,837
69,992
11,635
-
Total
(54,558,943)
(53,201,320)
799,907,148
733,535,103
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
144
b)
Following current standards, recognition has been given to the excess of the equity in the net assets purchased over the purchase
price (negative goodwill) in the purchase of shares as of December 31, 2003 and 2004 as follows:
Company
Central Costanera S.A.
Central Hidroeléctrica Betania S.A.
Cía. de Eletricidade do Río de Janeiro (*)
Edegel S.A.
Edelnor S.A.
Empresa Eléctrica de Bogotá S.A.
Inversiones Distrilima S.A.
Elesur S.A.
Synapsis Soluciones y Servicios IT Ltda.
2003
ThCh$
434,671
6,609,649
35,380,018
8,718,901
1,053,773
216,069
26,667
As of December 31,
Amortization
Net Balance
2004
ThCh$
2,699,974
5,218,912
2003
ThCh$
(16,952,154)
(14,680,338)
2004
ThCh$
(12,824,889)
(7,583,899)
-
-
-
7,984,811
965,050
197,877
24,423
(44,711,106)
(1,228,652)
(3,021,314)
(491,129)
-
-
-
15,855
15,855
(130,805)
(32,961,832)
(160,155)
(2,569,614)
(425,354)
(95,119)
(114,952)
Total
52,455,603
17,106,902
(81,215,498)
(56,735,814)
(*) According to the provisions of Circular 368 of the Superintendency of Securities and Insurance, the Company has amortized higher quarterly installments due to the revaluation of Cerj, caused by
the capital increase in January 2003.
N OTE 14. OTHER ASSE TS
Other assets as of each year end are as follows:
Bond discount
Bond issuance cost
Forward contracts and swap
Deferred expenses
Bank fees and interest expense
Investment find wholesale electrical market
Post-retirement benefits
Security deposits for judicial obligations
Recoverable - taxes
Reimbursable contributions
Investment in Empresa Eléctrica de Bogotá (1)
Regulatory assets
Fair - value derivative contracts
Others
As of December 31,
2003
ThCh$
20,072,691
6,657,377
4,986,444
12,879,804
29,198,128
-
2,131,172
29,538,640
12,761,176
1,315,207
-
43,067,826
16,669,892
5,847,944
2004
ThCh$
19,358,573
7,492,349
-
6,612,227
15,033,865
7,338,729
1,876,825
35,259,272
26,075,014
1,133,706
42,474,437
46,558,132
5,556,455
7,534,018
Total
185,126,301 222,303,602
The debt refunding plan was completed in May 2003, which
meant incurring expenditures required to obtain the loans, which
are amortized over the same term as the debt. Disbursements for
this item amounted to ThCh$57,503,327 classified in the statements
of cash flow under “Disbursements for Financing” within cash flows
for financing activities.
Continuing with the company’s refunding plan, Enersis S.A.
and its subsidiary Endesa Chile prepaid US$2,045 million of the last
loan obtained in May 2003. These payments were made with funds
from sale of assets, capital increases, issuance and placement of
bonds and obtaining new loans.
As a result of these pre-payments, accelerated amortization
of deferred expenses for ThCh$40,072,596 were made and charged
to financial expenses.
(1) Through a Memorandum of Understanding signed on October
5, 2004, the Corporación Financiera del Valle will stop being
shareholder of the Central Hidroeléctrica de Betania S.A. through
an asset exchange operation between the Corfivalle Group and
the Endesa Group.
This operation will be drafted for attestation during 2005 and
2006, when the mandatory legal processes defined by both
parties before the handing over of the corresponding assets
ownership are executed.
With this operation, the Endesa Group will hand over to
Corfivalle the Betania S.A. power sub-station and 3.81% of the
ownership interest in the Empresa de Eléctrica de Bogotá S.A. in
exchange for the ownership interest Corfivalle has in the Central
Hidroeléctrica de Betania S.A. (14.3% of the company.)
The parties understand that the steps to perfect the above-
mentioned Memorandum of Understanding will be gradually
executed, and have agreed the economic and political right
beneficial interest of the assets that will be exchanged as from
January 1, 2004. According to this, the Empresa Eléctrica de
Bogotá S.A. 3.81% ownership interest that is subject to this
agreement is included under the Others item.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 15. D U E TO BAN KS AN D FI NAN CIAL I NSTITUTI O NS
a) Short-term debt due to banks and financial institutions:
145
Financial Institution
US$
Euros
Foreign currency
Other foreign currency
2004
ThCh$
2003
ThCh$
2004
ThCh$
Ch$
2003
ThCh$
2004
ThCh$
ABN Amro Bank
AV Villas
Banco Alfa
Banco ABC Brasil S.A.
Banco BBM
Banco Banrisul
Banco Bayerische Landes
Banco BBVA
Banco BBVA Bhif
Banco Beal
Banco Continental
Banco Crédito Perú
Banco Crédito e Inversiones
Banco Crédito Nacional
Banco Credit Swiss First Boston
Banco Davivienda
Banco de Bogota
Banco de Chile
Banco de Galicia y Buenos Aires
Banco de la Ciudad de Buenos Aires
Banco de la Nación
Banco de la Provincia de Buenos Aires
Banco de Occidente
Banco do Brasil
Banco CR2 de Investimentos
Banco Fibra
Banco Ganadero
Banco HBSC
Banco Hermes
Banco Itau
Banco Lloyds
Banco Merril Lynch
Banco Nacional del Lavoro
Banco Nationale de Paris
Banco Popular
Banco Real
Banco Río
Banco Safra
Banco Santander Central Hispano
Banco Santander Santiago
Banco Tequendama
Banco Union
Banco Wiese Sudameris
Bancolombia
Bank Boston
Bank of Tokio - Mitsubishi
Barings
Bndes
Bnp Paribas
Brandesco
Caixa General de Depósitos
Citibank
Colpatria
Compagnie Belge de la Webstlb
Conavi
Corfinsura
Deutsche Bank
Electrobras - Brasil
Interbank
JP Morgan
Unibanco
Total
Total principal
2004
ThCh$
2003
ThCh$
6,103,990
-
-
-
-
-
701,288
-
-
471,721
-
-
3
2,496,919
-
-
-
403,204
-
-
-
-
-
5,380,440
-
-
-
10,177,647
3,372,502
15,244,402
8,105,115
-
2,578,272
-
-
-
3,754,355
2,068,814
22,801,231
2,108,612
-
-
-
-
5,804,448
16,681,138
3,735,924
-
-
9,375,035
-
283,175
-
-
-
-
-
117,725
-
-
-
5,710,588
-
-
-
-
-
-
31,003
607,566
2,021,133
-
557,957
-
-
-
-
8,678,548
-
-
8,327,069
1,301,529
755,385
-
-
-
-
-
1,865,149
1,158,976
466,791
-
-
-
-
8,610,036
-
-
-
-
-
-
8,112,588 13,856,057
-
899,322
-
-
3,982
-
2,979
20,009
-
-
-
-
-
-
-
-
-
-
2003
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,588,066
-
-
-
-
-
-
-
-
-
-
-
- 14,053,807
-
-
6,673,668
- 4,208,267
-
3,637,805
-
-
4,246,015
-
-
-
401,293
-
-
-
-
-
- 13,693,038
-
-
-
-
-
-
13,160,679
21,673,832
-
9,506,572
13,043,218
-
-
-
-
-
-
-
3,383,914
-
-
3,295,130
3,335,822
-
9,362,360
11,114,034
-
-
-
-
-
-
-
-
-
-
3,131
-
-
-
-
-
-
1,756,857
-
-
-
-
96,463
-
-
1,508,146
-
-
16,580,167
8,971,296
-
-
-
-
-
-
-
-
-
-
-
4,507,076
-
-
-
-
658,772
-
-
-
1,487,398
-
-
4,479,117
-
46,323
-
-
5,491,496
3,098,757
-
-
-
-
10,618,072 10,794,821
-
-
-
-
-
-
-
13,754
-
-
-
3,272,497
-
-
-
-
-
16,682,218
-
782
-
-
-
-
908,779
9,798,002
-
-
-
-
-
-
-
-
-
-
-
-
-
2,676
-
-
-
2,106,620 17,554,534
-
-
1,799,483
1,124,017
1,349,131
14,355,121
17,965,061
-
-
14,430
-
-
-
17,349,476
4,500,851
-
2,911,264
2,060,670
-
5,603
7,401
-
-
-
-
-
-
-
-
-
8,045
-
-
-
179
-
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,430,119
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,353
2,426,485
As of December 31,
2003
2004
ThCh$
ThCh$
20,157,797
6,673,668
-
-
-
-
-
-
-
-
5
-
-
-
4
-
-
-
-
283,175
-
- 4,208,267
3,637,805
-
4,246,015
-
-
401,293
117,725
701,288
-
13,693,038
5
8,045
-
471,721
18,871,267
21,673,832
9,506,572
13,043,218
4
182
-
2,496,919
3,383,914
-
3,295,130
3,335,822
9,362,360
11,114,034
39,356
403,210
607,566
-
-
2,021,133
-
-
3,131
-
-
557,957
-
-
-
1,756,857
-
-
5,380,440
-
96,463
-
-
1,508,146
-
-
8,971,296 25,258,715
-
-
10,177,647
-
-
-
3,372,502
8,327,069
- 15,244,402
1,301,529
12,612,191
-
755,385
-
-
658,772
2,578,272
-
-
1,487,398
-
-
4,479,117
-
46,323
-
-
5,491,496
6,853,112
-
1,865,149
2,068,814
-
11,953,797
33,419,303
-
2,893,276
4,538,731
-
1,799,483
-
-
1,124,017
-
1,349,131
13,754
-
-
14,355,121
-
23,769,509 11,882,533
-
-
16,681,138
-
-
3,735,924
-
16,682,218
14,430
-
782
-
-
-
9,375,035
-
-
908,779
3,588,066
- 25,462,064 23,654,059
-
-
899,322
-
-
-
-
-
3,982
-
-
-
5,655
-
-
20,009
2,106,620 17,554,534
-
4,500,851
-
2,911,264
2,060,670
-
5,603
7,401
-
129,477,648 55,274,979
3,588,066
908,779
184,456,413 133,304,524
2,438,349
2,434,847 319,960,476 191,923,129
123,003,765 54,539,235
3,408,662
904,198 175,233,592 129,518,291
2,438,160
2,426,483
304,084,179 187,388,207
Weighted average annual interest rate
8.20%
3.91%
5.00%
3.00%
15.93%
10.88%
3.00%
9.00%
10.40%
8.75%
Percentage of debt in foreign currency:
Percentage of debt in local currency:
As of December 31,
2003
2004
%
%
98.73%
99.24%
1.27%
0.76%
Total
100.00%
100.00%
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
146
b) Current portion of long-term debt due to banks and financial institutions:
Financial Institution
ABN Amro Bank
Bancafe
Banca Intesa S.P.A. London Branch
Banco Bayerische Landes
Banco BBVA
Banco Beal
Banco Colpatria
Banco Corfinsura
Banco Davivienda
Banco de Sabadell
Banco do Brasil
Banco do Estado do Ceará
Banco do Nordeste do Brasil
Banco Español de Crédito
Banco Estado
Banco Europeo de Investimentos
Banco HBSC
Banco Medio Crédito
Banco Nacionale del Lavoro
Banco Popular Español
Banco San Paolo
Banco Santander Central Hispano
Banco Santander Santiago
Bancolombia
Banesto
Bank Boston
Bank of América
Bank of Tokio - Mitsubishi
Banque Nationale París
Barings Bank
Birf
Bnp Paribas
Bndes
Caja de Ahorros y Monte de Piedad de Madrid
Citibank N.A.
Compagnie Belge de la Webstlb
Conavi
Credit Lyonnais N.Y.
Dresner B. Luxemburg
Deutsche Bank A.G.
Export Develop. Corp.
Granahorrar
ING Bank N.V.
Israel Discount Bank N.Y.
J.P. Morgan Chase Bank
Kreditanstal Fur Weideraubau
Landesbank Rheiniland-Pfalz
Mizuho Corporate Bank Ltd.
Royal Bank of Canada
Santander Investment Bank Ltd.
Skandinaviska Enskilda Banken
Societe Generale
Westlb A.G. N.Y. Branch
Unibanco
Total
Total principal
US$
Euros
Yen
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
Foreign currency
Other foreign currency
2004
ThCh$
2003
ThCh$
2003
ThCh$
1,805,481
-
10,760
345,966
219,234
10,148,062
-
-
-
2,139
329,676
-
-
5,364
3,964
918,901
20,244
-
-
7,536
140,774
202,374
83,051
-
5,220,485
-
2004
ThCh$
4,730,550
-
-
627,273
13,645
-
-
-
-
-
278,506
-
-
-
-
845,785
-
-
-
-
-
4,510,617
-
-
-
-
47,599,342 15,424,717
5,398,730
6,034,645
-
12,057,091
1,166,638
-
-
-
3,768,571
-
-
-
13,644
121,425
5,685
10,509,911
823,604
-
-
-
-
10,760
-
16,859
57,334
7,959
1,757,221
1,872,924
-
-
-
10,760
-
1,724
323,089 30,974,021
321,924
355,648
-
9,579
-
4,310
-
10,758
3,134,095
-
1,857,431
2,034,805
-
1,169,498
-
10,761
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 13,510,451
-
-
435,146
126,861 125,395
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
412,818
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,553
-
-
-
-
50,369
201,474
163,192
-
1,026,287
-
46,241
2,250
-
-
-
1,865,846
-
-
-
-
-
304,785
-
-
-
422,655
-
-
1,144,981
-
8,451,802
-
-
-
125,921
-
-
-
-
75,553
-
-
-
-
-
-
-
-
-
-
-
57,382
-
1,246,090
-
-
-
-
830,726
3,322,906
2,492,844
-
1,185,779
191,660
47,975
-
-
-
-
1,787,795
637,967
-
-
-
-
3,322,906
-
-
-
415,332
-
-
-
-
8,933,350
-
-
-
2,076,816
-
-
-
-
1,246,090
-
-
-
-
-
-
-
-
-
-
-
4,437,572
Ch$
2003
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,941,310
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2004
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,700,403
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
As of December 31
2003
ThCh$
1,805,481
75,553
10,760
345,966
219,234
10,148,062
50,369
201,474
163,192
2,139
1,355,963
-
46,241
7,614
36,945,274
918,901
20,244
1,865,846
-
7,536
140,774
202,374
83,051
304,785
5,220,485
13,510,451
47,599,342
7,019,307
12,057,091
-
1,144,981
-
8,451,802
121,425
10,509,911
-
125,921
10,760
16,859
57,334
1,872,924
75,553
10,760
1,724
323,089
355,648
9,579
4,310
10,758
3,134,095
2,034,805
1,169,498
10,761
57,382
2004
ThCh$
4,730,550
1,246,090
-
627,273
13,645
-
830,726
3,322,906
2,492,844
-
1,464,285
191,660
47,975
-
1,700,403
845,785
-
1,787,795
637,967
-
-
4,510,617
-
3,322,906
-
-
15,424,717
6,352,275
-
1,166,638
-
3,768,571
8,933,350
13,644
5,685
823,604
2,076,816
-
-
7,959
1,757,221
1,246,090
-
-
30,974,021
321,924
-
-
-
-
1,857,431
-
-
4,437,572
104,809,329 72,526,521
126,861 125,395 13,945,597
412,818 14,014,291 32,175,808
36,941,310
1,700,403 169,837,388 106,940,945
100,743,284 70,524,435
124,781 124,218 13,934,061
411,782 12,990,012 30,295,455
36,708,402
1,614,382 164,500,540 102,970,272
Weighted average annual interest rate
4.96%
7.03%
3.00%
3.00%
3.46%
0.90%
16.79%
12.99%
4.56%
9.00%
5.64%
8.83%
Percentage of debt in foreign currency:
Percentage of debt in local currency:
As of December 31,
2003
2004
%
%
98.41%
78.25%
1.59%
21.75%
Total
100.00% 100.00%
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 16. LO N G -TER M P O RTI O N O F D EBT D U E TO BAN KS AN D FI NANCIAL I NSTITUTI O NS
147
Financial
Institution
Currency
After 10 years
Years
ThCh$
US$
$ Colom
US$
Rs
US$
US$
$ Colom
$ Reaj.
US$
US$
$ Colom
$ Colom
US$
Rs
US$
US$
$ Arg
US$
$ Arg
$ Arg
US$
$ Colom
US$
US$
US$
US$
US$
Libra
Yen
Euros
Rs
Rs
US$
Rs
but within
5 years
ThCh$
but within
10 years
ThCh$
but within
3 years
ThCh$
As of December 31, 2004
After 1 year After 2 years After 3 years After 5 years
but within
2 years
ThCh$
5,335,062
-
-
324,963
8,424,362
-
-
-
-
4,645,000
-
-
-
2,209,682
442,826
-
1,768,301
3,456,151
1,347,869
636,494
-
-
-
3,901,800
1,621,643
8,506,342
-
-
-
-
-
39,632
624,288
28,697,984
-
1,808,395
-
2,246,322
-
-
-
3,718,211
-
1,518,028
-
-
-
-
22,964,880
266,802
-
-
-
-
1,381,678
-
11,668,915
-
-
2,332,462
-
-
-
-
-
-
-
- 83,610,000
1,554,974
-
1,008,580
1,698,508
-
-
9,290,000
4,645,000
4,665,140
-
-
313,735
-
-
2,209,682
1,104,841
340,990
206,593
-
-
3,536,601
1,768,300
6,202,860
3,456,151
-
-
-
-
-
-
6,219,897
-
-
-
- 83,610,000
3,243,286
-
-
-
-
-
-
-
-
5,359,587
- 83,610,000
-
-
- 83,610,000
-
3,887,436
6,219,897
-
-
-
3,036,056
2,332,463
-
-
-
-
533,605
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,290,000
-
-
-
3,550,835
1,995,651
-
2,652,453
4,559,730
-
-
-
-
-
-
4,864,927
-
-
-
-
-
-
-
-
34,044,251
-
-
-
-
-
-
-
-
-
4,676,332
-
-
-
-
-
-
-
-
-
-
-
-
-
4,041,150
-
-
-
5,577,317
-
1,518,028
-
-
-
-
-
266,802
-
-
-
-
1,381,678
-
8,265,483
1,621,643
-
-
-
-
-
-
-
-
9,731,771
ABN Amro Bank
Bancafe
Banca Intesa S.P.A.
Banco ABC Brasil
Banco Bayerische Landes
Banco BBVA
Banco Colpatria
Banco Estado
Banco Español de Crédito
Banco Europeo de Investimentos
Banco Davivienda
Banco de Colombia
Banco de Sabadell
Banco do Brasil
Banco Lloyd’s
Banco Medio Crédito
Banco Nacionale de Paris
Banco Nacional del Lavoro
Banco Popular Español
Bancolombia
Banco Santander Central Hispano
Banesto
Bank of America
Bank Tokio - Mitsubishi
Banco do Estado de Ceará
Banco do Nordeste do Brasil
Barings Bank
BNDES
Caja de Ahorros y Monte de Piedad de Madrid US$
Caixa General de Depósitos
Citibank N.Y.
Compagnie Belge de la Webstlb
Conavi
Corfinsura
Credit Lyonnais N.Y.
Deutsche Bank A.G.
Dresdner Bank
Export Develop. Corp.
Granahorrar
HBSC Bank
ING Bank N.V.
Israel Discount Bank of N.Y.
J.P.Morgan Chase Bank
Kreditanstal Fur Weideraubau
Landesbank Rheinland Pflaz Giroz
Mizuho Corporate Bank Ltd.
Royal Bank of Canadá
San Paolo IMI S.P.A.
Skandinaviska Enskilda Banken
Westlb A.G. N.Y. Branch
Unibanco
Euros
US$
US$
$ Colom
$ Colom
US$
US$
US$
US$
$ Colom
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
Rs
911,946
Total
Long-term
portion
2004
ThCh$
5,335,062
-
2,332,462
-
-
-
324,963
-
-
8,424,362
- 83,610,000
1,554,974
-
2,707,088
-
-
-
27,870,000
-
4,665,140
-
313,735
-
-
-
9,075,040
-
2,986,060
-
-
-
9,725,655
-
18,586,838
1,347,869
-
636,494
-
-
-
6,219,897
-
-
-
87,511,800
-
11,351,499
-
8,506,342
-
-
-
-
-
-
-
-
-
-
-
39,632
-
624,288
-
-
77,833,593
- 83,610,000
-
1,808,395
- 83,610,000
6,287,472
-
3,887,436
-
6,219,897
-
-
-
9,295,528
-
-
-
- 10,748,444
2,332,463
-
-
-
-
-
-
-
- 22,964,880
1,067,209
-
-
-
-
-
-
-
-
-
2,763,356
-
-
-
19,934,398
-
Annual
interest
rate
average
4.00%
12.45%
0.00%
2.18%
6.47%
2.94%
12.45%
9.00%
0.00%
14.60%
12.45%
9.00%
0.00%
17.86%
5.18%
0.00%
1.75%
5.78%
7.06%
9.70%
0.00%
12.45%
0.00%
4.32%
6.64%
7.42%
0.00%
0.00%
0.00%
0.00%
0.00%
7.74%
6.98%
16.32%
2.94%
3.00%
2.94%
5.87%
12.45%
12.45%
0.00%
6.55%
0.00%
2.86%
12.45%
0.00%
0.00%
0.00%
7.23%
4.85%
0.00%
0.00%
0.00%
0.00%
0.65%
0.00%
12.90%
Total
long-term
portion - 2003
ThCh$
8,521,030
3,286,172
5,825,219
-
13,258,798
85,207,379
2,190,781
4,473,332
2,903,969
30,650,642
6,572,620
-
1,158,131
8,738,080
3,313,606
7,073,031
11,978,742
64,608,902
-
-
4,079,381
8,763,125
361,513
121,040,257
17,353,151
-
65,830,614
412,208
432,999
124,781
177,321
83,733
-
87,722,501
45,648,375
-
24,516,394
-
5,476,953
8,763,125
5,825,219
24,342,879
9,126,754
13,356,162
3,286,172
10,959,017
5,825,219
933,418
48,691,600
1,498,278
5,185,655
2,333,544
5,825,225
56,123,399
5,029,074
5,825,217
28,535
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
117,555,630 45,597,000 396,413,516 65,634,179
-
911,946
626,112,271
854,742,232
Percentage of debt in local currency:
Percentage of debt in foreign currency:
As of December 31,
2003
2004
%
%
0.43%
0.52%
99.57%
99.48%
Total
100.00%
100.00%
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
148
On May 15, 2003, Enersis S.A. and its subsidiary Empresa
Nacional de Electricidad S.A. subscribed syndicated loans to refinance
bank debts in an amount of US$2.330 million with 32 banks.
Due to this refinancing, obligations with original maturities
in 2003 and 2004, now come due in 2008, with principal payments
starting in 2005.
The covenants which regulate these loans do not trigger
prepayment of the obligations if the Company or its subsidiary Endesa
Chile’s risk rating falls below investment grade.
On July 28, 2003, Enersis S.A. prepaid US$582 million of bank
debt with resources from the sale of Río Maipo and its own capital
increase.
On November 24, 2003, Enersis S.A. prepaid all the subscribed
loan refinancing of May 2003; this prepayment was made mainly
with funds from a new loan of US$500 million subscribed with six
banks on November 14, 2003 and from the issuance and placement
of bonds worth US$350 million on the United States market and a
further US$155 million from other cash sources. This final payment
released all the securities pledged to the first thirty two syndicated
banks.
Similarly, Endesa Chile has prepaid US$458 million with
resources from the sale of assets and issuance and placement of
bonds issued on October 3, 2003, and a new US$250 million credit
agreement signed on February 4, 2004.
Endesa Chile subsidiary new credit agreements includes a 3.5
year term with repayment when due and a 1.15% libor spread.
The operation was carried out without warranties,
endorsements, or investments or indebtedness restrictions.
On April 15, 2004, Enersis S.A. prepaid US$150 million of the
syndicated loan obtained in November, 2003, for US$500 million
from the banks BSCH, Banco Bilbao Viscaya Argentaria, San Paolo
IMI, Bank of Tokio Mitsubishi, Caja Madrid, and Deutsche Bank.
The remaining US$350 million balance was refinanced in
November, 2004, through revolving overdraft lines whose term is
4 years. It is possible to prepay and draw down funds throughout
the contract period. The interest (spread) depends on the corporate
rating given by S & P. Currently, at BBB, the interest spread is
0.375%.
On November 10, 2004, Endesa Chile entered into a new credit
for MUS$250 million, with which it prepaid the loan entered into on
February 4, 2004.
The new Endesa Chile loan matures on November 11, 2010,
and has a 0.375% Libor spread.
The operation was carried out without warranties,
endorsements, or investment or indebtedness restrictions.
N OTE 17. OTHER CU RRENT LIABILITIES
Other current liabilities are as follows:
As of December 31,
2003
2004
ThCh$
ThCh$
Advances and guarantee on construction
Taxes payables
Contingencies - third party claims
Customer advances
Azopardo provision
Accrued employees benefits - other
Forward contracts and swaps
Fair value - derivative contracts
Emergency energy provision (Brazil)
Other current liabilities
126,179
1,059,432
36,439
1,176,375
19,856,908 22,566,897
2,149,780
3,265,161
1,891,739
4,328,056
159,867
1,896,193
3,710,167
2,511,740
3,129,150
1,727,176
26,514,722
7,653,454
1,666,302
2,749,793
Total
66,994,856 41,180,674
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
149
N OTE 18. BO N DS PAYABLE
a) Details of the current portion of bonds payable is as follows:
Instrument
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Codensa
Bonos Codensa
Bonos Codensa
Bonos Edesur
Bonos Edesur
Bonos Cerj
Bonos Coelce
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds II - Enersis
Bono N° 269
Bono N° 269
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Betania
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Endesa Chile Internacional
Total
Series
One
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
B3
B5
B8
5
6
Unit
Unit
One
Two
Three
One
B-1
B-2
One
Two
Three
One
One
E-1 y E-2
C2; D1 Y D2
F
144A
144A
G
H
B
One
Two
Three
Four
Five B
One A
Three A
Three B
Four A
5 A 2° issue
6 A 2° issue
6 B 2° essue
7 A 2° issue
A-1
B-5
B-7
B-10
B-10
C-10
C-10
B-10 2° issue
B-1
Unit
Face value
outstanding
Currency
4,891,900
80,000,000
18,570,000
30,000,000
20,000,000
100,000,000
40,000,000
30,000,000
20,000,000
20,000,000
20,000,000
20,000,000
40,000,000
500,000,000,000
200,000,000,000
250,000,000,000
7,488,161
14,976,323
294,000,000
88,500,000
300,000,000
350,000,000
858,000
350,000,000
41,174
1,935,000
230,000,000
220,000,000
200,000,000
400,000,000
400,000,000
6,000,000
1,115,287
1,500,000
400,000,000
200,000,000
4,000,000
4,000,000
300,000,000,000
30,000,000
30,000,000
30,000,000
20,000,000
35,000,000
100,000,000
50,000,000
50,000,000
50,000,000
10,000,000
30,000,000
20,000,000
10,000,000
15,000,000,000
12,750,000,000
19,500,000,000
229,825,000,000
60,000,000,000
7,701,962,000
19,777,918,000
50,000,000,000
85,000,000,000
150,000,000
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
$ Col.
$ Col.
$ Col.
$ Arg
$ Arg
Reales
Reales
US$
US$
US$
US$
U.F.
U.F.
US$
US$
US$
US$
US$
U.F.
U.F.
U.F.
US$
US$
U.F.
U.F.
$ Col.
US$
US$
US$
US$
Soles
Soles
Soles
Soles
Soles
US$
Soles
Soles
US$
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
US$
Interest
rate
%
9.61%
VAC* + 7.5%
VAC* + 6.2%
6.50%
6.34%
VAC* + 639%
4.47%
5.86%
8.75%
6.25%
VAC* + 5.4%
VAC* + 6.5%
VAC* + 6.5%
10.91%
12.09%
12.28%
8.50%
7.00%
20.64%
CDI + 16%
6.90%
7.40%
6.60%
7.38%
5.50%
5.75%
7.88%
7.33%
8.13%
7.75%
8.50%
6.20%
6.80%
6.20%
8.35%
8.63%
4.80%
6.20%
12.04%
8.75%
8.41%
8.75%
8.46%
6.00%
6.00%
4.13%
4.88%
4.75%
3.75%
5.88%
8.50%
4.78%
9.89%
9.97%
10.29%
10.60%
10.57%
9.88%
10.25%
15.18%
13.95%
7.20%
Maturity date
01/02/2011
01/07/2006
26/04/2007
01/01/2004
24/01/2004
10/10/2006
11/09/2007
15/01/2008
08/06/2009
15/01/2012
22/04/2014
01/06/2014
01/06/2014
15/03/2009
15/03/2011
15/03/2014
05/04/2006
05/10/2007
01/06/2007
20/02/2012
01/12/2006
01/12/2016
01/12/2026
01/12/2014
15/06/2009
15/06/2022
01/02/2027
01/02/2037
01/02/2097
15/07/2008
01/04/2009
01/08/2006
01/11/2010
01/08/2022
01/08/2013
01/08/2015
15/10/2010
15/10/2008
10/11/2011
03/06/2006
14/02/2007
13/06/2007
21/11/2005
22/02/2004
06/06/2005
04/09/2006
30/10/2006
12/12/2006
26/01/2009
27/02/2008
18/06/2008
26/07/2009
26/07/2006
09/10/2004
09/10/2006
09/10/2009
10/11/2009
09/10/2009
08/10/2009
26/07/2006
26/07/2006
01/04/2006
As of December 31,
2003
ThCh$
5,150
535,812
38,337
5,425,020
3,557,251
253,288
95,993
-
-
-
-
-
-
-
-
-
-
-
-
-
1,049,913
949,874
2,872
1,571,066
156,578
79,277
4,105,260
4,086,799
788,936
8,647,831
5,173,483
2,647,755
2,665,953
661,939
8,865,590
4,579,317
685,589
882,578
-
126,048
585,137
82,583
114,631
5,381,578
70,282
116,771
72,570
22,915
-
-
-
-
60,416
2,857,948
102,361
1,243,574
201,756
75,532
40,901
1,193,394
1,215,623
1,643,342
2004
ThCh$
5,377
538,881
38,556
-
-
254,739
92,761
137,460
17,774
97,585
36,448
13,665
8,684
71,050
316,497
402,350
153,456
5,744
16,521,842
2,979,255
961,515
869,899
2,630
6,743,476
72,621
79,158
3,771,380
3,742,710
802,816
7,919,724
4,737,900
2,643,780
2,800,303
660,946
7,757,150
4,006,313
684,563
881,259
1,197,295
115,423
535,871
75,622
11,252,968
-
17,046,287
112,835
68,975
20,162
89,416
102,242
10,423
88,492
63,581
-
108,803
1,322,078
209,129
85,246
46,172
1,009,389
1,188,391
1,504,980
72,718,823
107,084,047
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
150
b) Details of the long-term portion of bonds payable is as follows as of:
Instrument
Series
Currency
Face value outstanding
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Edelnor
Bonos Codensa
Bonos Codensa
Bonos Codensa
Bonos Edesur
Bonos Edesur
Bonos Cerj
Bonos Coelce
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds - Enersis
Yankee Bonds II - Enersis
Bono N° 269
Bono N° 269
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Endesa
Bonos Betania
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Edegel
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Emgesa
Bonos Endesa Chile Internacional Unit
One
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
I°Prog.
B3
B5
B8
5
6
Unit
Unit
One
Two
Three
One
B-1
B-2
One
Two
Three
One
One
E-1 y E-2
C2; D1 Y D2
F
144A
144A
G
H
B
One
Two
Three
Four
One A
Three A
Three B
Four A
5 A 2° issue
6 A 2° issue
6 B 2° issue
7 A 2° issue
A-1
B-1
B-7
B-10
B-10
C-10
C-10
B-10 2° issue
Total
4,891,900
80,000,000
18,570,000
100,000,000
40,000,000
30,000,000
20,000,000
20,000,000
20,000,000
20,000,000
40,000,000
500,000,000,000
200,000,000,000
250,000,000,000
7,488,161
14,976,323
294,000,000
88,500,000
300,000,000
350,000,000
858,000
350,000,000
41,174
1,935,000
230,000,000
220,000,000
200,000,000
400,000,000
400,000,000
6,000,000
1,115,287
1,500,000
400,000,000
200,000,000
4,000,000
4,000,000
300,000,000,000
30,000,000
30,000,000
30,000,000
20,000,000
100,000,000
50,000,000
50,000,000
50,000,000
10,000,000
30,000,000
20,000,000
10,000,000
15,000,000,000
85,000,000,000
19,500,000,000
229,825,000,000
60,000,000,000
7,701,962,000
19,777,918,000
50,000,000,000
150,000,000
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
$ Col.
$ Col.
$ Col.
$ Arg
$ Arg
Reales
Reales
US$
US$
US$
US$
U.F.
U.F.
US$
US$
US$
US$
US$
U.F.
U.F.
U.F.
US$
US$
U.F.
U.F.
$ Col.
US$
US$
US$
US$
Soles
Soles
Soles
Soles
US$
Soles
Soles
US$
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
$ Col.
US$
Interest
rate
%
9.61%
VAC* + 7.5 %
VAC* + 6.2%
VAC* + 6.9%
4.47%
5.86%
8.75%
6.25%
VAC* + 5.4%
VAC* + 6.5 %
VAC* + 6.5 %
10.91%
12.09%
12.28%
8.50%
7.00%
20.64%
CDI + 16%
6.90%
7.40%
6.60%
7.38%
5.50%
5.75%
7.88%
7.33%
8.13%
7.75%
8.50%
6.20%
6.80%
6.20%
8.35%
8.63%
4.80%
6.20%
12.04%
8.75%
8.41%
8.75%
8.46%
6.00%
4.13%
4.88%
4.75%
3.75%
5.88%
8.50%
4.78%
9.89%
13.95%
10.29%
10.60%
10.57%
9.88%
10.25%
15.18%
7.20%
Maturity date
As of December 31,
01/02/2011
01/07/2006
26/04/2007
10/10/2006
11/09/2007
15/01/2008
08/06/2009
15/01/2012
22/04/2014
01/06/2014
01/06/2014
15/03/2009
15/03/2011
15/03/2014
05/04/2006
05/10/2007
01/06/2007
20/02/2012
01/12/2006
01/12/2016
01/12/2026
01/12/2014
15/06/2009
15/06/2022
01/02/2027
01/02/2037
01/02/2097
15/07/2008
01/04/2009
01/08/2006
01/11/2010
01/08/2022
01/08/2013
01/08/2015
15/10/2010
15/10/2008
10/11/2011
03/06/2006
14/02/2007
13/06/2007
21/11/2005
06/06/2005
04/09/2006
30/10/2006
12/12/2006
26/01/2009
27/02/2008
18/06/2008
26/07/2009
26/07/2006
26/06/2006
09/10/2006
09/10/2009
10/11/2009
09/10/2009
08/10/2009
26/07/2006
01/04/2006
2003
ThCh$
859,783
14,431,400
3,379,519
18,103,830
7,030,264
-
-
-
-
-
-
-
-
-
-
-
-
-
182,593,500
151,999,350
522,217
213,025,750
696,053
33,558,705
125,308,441
133,901,900
24,598,997
243,458,000
243,458,000
104,058,000
18,103,889
26,014,500
243,458,000
121,729,000
69,372,000
69,372,000
-
18,259,350
18,259,350
18,259,350
12,172,900
17,570,585
8,785,291
8,785,291
8,785,291
-
-
-
-
3,286,172
18,621,639
4,272,023
50,349,935
13,144,687
3,163,907
1,777,815
10,953,905
91,296,751
2004
ThCh$
830,818
14,514,766
3,398,881
18,206,859
6,793,418
5,095,064
3,396,709
3,396,709
3,447,326
3,440,132
6,868,319
11,662,308
46,649,231
58,311,539
7,488,161
14,976,323
46,303,253
16,846,109
167,220,000
139,201,732
478,249
195,090,000
642,009
33,508,492
114,758,069
122,628,000
22,527,879
222,960,000
222,960,000
103,902,300
15,477,997
25,975,575
222,960,000
111,480,000
69,268,200
69,268,200
69,973,766
16,722,000
16,722,000
16,722,000
-
-
8,489,187
8,489,187
8,489,187
5,574,000
5,093,511
3,395,675
5,574,000
3,498,692
19,825,842
4,548,300
53,605,777
13,994,769
3,570,852
2,006,479
11,662,258
83,610,000
2,356,777,340 2,493,500,109
*
VAC (“Valor de activación constante”) is issued by the Banco Central de Reserva del Perú and calculated based in the inflation rate (represents an inflation - indexed new Peruvian Sol).
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c) Bonds payable consist of the following:
(1) Enersis S.A. Series B1-B2
During the second half of 2004, second half, debts have
been re-nominated through UF/US$swap contrac ts for an
amount of US$100,000,000 associated to the tranche 1 bond and
US$250,000,000 associated to tranche 2.
On September 11, 2001, Enersis S.A. registered two series of
bearer bonds dated June 14, 2001, as follows:
Repurchase of Yankee Bonds
Enersis Internacional, a 100% subsidiary of Enersis during
November 2001 made a tender offer to repurchase all or a portion
of the Series 2 Yankee Bonds. The offer expired November 21, 2001
and Enersis Internacional repurchased a total of US$100,266,000 in
bonds with accrued interest, at a price of US$95,536,000.
(3) Internacional Bonds (Yankee Bonds II)
On November 24, 2003, the Company, through its Cayman
Islands Agency, issued and placed Yankee Bonds on the American
market for US$350 million. This placement was made in a single
tranche, whose features are as follows:
Series
1
Total amount
in US$
350.000.000
Years to
maturity
10
Stated annual
interest rate
7,38%
Interest is paid six-monthly and amortization of capital is a
single installment at the end of the term.
During 2004 second half, debts have been re-nominated
through US$/UF swap contracts for the total of this issue.
(4) Bonds of Chilectra S.A.
On October 13, 2003, Chilectra S.A. registered, in the
Superintendency of Securities and Insurance, 2 lines of bonds
corresponding to Nº 347 and 348 for a maximum line amount of
UF4,200,000 and UF4,000,000 respectively; the placement has a
maturity of 10 years from August 22, 2003. To date, the placement
of the related bonds has not been made.
Series
B1
B1
B2
B2
Total amount No.of bonds
In UF
1,000,000
3,000,000
1,000,000
1,500,000
per series
1,000
300
1,000
150
Face value
in UF
1,000
10,000
1,000
10,000
The scheduled maturity of the Series B-1 bonds is 8 years,
interest and principal payable semi-annually. Annual interest is
5.50%, compounded semi-annually.
The scheduled maturity of the Series B-2 bonds is 21 years,
principal payments beginning after 5 years, interest and principal
payable semi-annually. Annual interest is 5.75%, compounded semi-
annually.
In November 2003, these series were voluntarily exchanged
for shares in connection with Enersis’ capital increase approved on
March 31, 2003. Holders converted Ch$63,656,587 (historical)
into the equivalent of 893,612,466 first issue shares; the amounts
underwritten were determined by experts and the following
amounts were capitalized Ch$46,964,178,894 for series B1 and
Ch$7,028,065,024 (historical) for series B2. (See Note 22 (a.))
(2) Enersis S.A. (Yankee Bonds)
On November 21, 1996, the Company, acting through its agency
in the Cayman Islands, issued corporate notes (Yankee Bonds) for
US$800 million in three series, as follows:
Series
1
2
3
Total amount
in US$
300,000,000
350,000,000
150,000,000
Years to
maturity
10
20
30
Stated annual
interest rate
6.9%
7.4%
6.6%
Interest is payable on a semi-annual basis and principal is due
upon maturity. The Series 3 bond holders have a pre-redemption
option in year seven, which was exercised by nearly all holders in
November 2003 for US$149,142,000.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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(5) Edelnor Bonds (Subsidiary of Distrilima S.A.)
First Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Principal amortization
Second Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Anticipated redemption option
100 soles each
15 years
: March 1, 1996
: 49,919
:
:
: 9.6136% annual
: Annually, on coupon maturity
: Amortization of total principal upon maturity
146,300
1,000 soles each
: November 10, 1998
:
:
: 4 years
:
: Accrued and paid within 90 days
: Early redemption option
14.396% annual
At December 31, 2004, this Issuance is totally cancelled.
Third Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
15,000
: August 7, 1998
:
: US$1,000 each
: 3 years
: 7.7% annual
: Accrued and paid within 90 days
At December 31, 2004, this Issuance is totally cancelled.
First program of Corporate Bonds
First Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Second Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
146,300
: October 29, 2001
:
: 30,000 soles each
: 5 years
: 7.5% + VAC
: Semi - annual
: October 19, 2001
: 20,000
: 5,000 new soles each
: 5 years
: 6.9% annual + VAC
: Semi – annual
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Third Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Fourth Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Fifth Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Sixth Issuance
Date of Issuance
Number of bonds subscribed
Face value
Redemption term
Interest rate
Interest payment
Seventh Issuance
Date of Issuance
Number of bonds subscribed
Nominal value
Term
Interest rate
Payment of interests
Eighth Issuance
Date of Issuance
Number of bonds subscribed
Nominal value
Term
Interest rate
Interest payment
January 24, 2002
:
: 6,000
: 5,000 (new soles each)
: 2 years
: 6.5 % annual
: Semi - annual
: April 24, 2002
: 4,000
: 5,000 (new soles each)
: 2 years
: 6.34 % annual
: Semi - annual
: March 1, 2003
: 3,714
: 5,000 (new soles each)
: 4 years
: 6.2 % annual + VAC
: Semi - annual
: September 12, 2003
: 8,000
: 5,000 (new soles each)
: 4 years
: 4.46875 % annual
: Semi - annual
: January 16, 2004.
: 6,000 bonds.
: 5,000 (new soles) each.
: 4 years.
: 5.86%.
: Semi-annual.
: January 16, 2004.
: 4,000 bonds.
: 5,000 (new soles) each.
: 8 years.
: 6.25%.
: Semi-annual.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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Ninth Issuance
Date of Issuance
Number of bonds subscribed
Nominal value
Term
Interest rate
Interest payment
Tenth Issuance
Date of Issuance
Number of bonds subscribed
Nominal value
Term
Interest rate
Interest payment
Eleventh Issuance
Date of Issuance
Number of bonds subscribed
Nominal value
Term
Interest rate
Interest payment
Twelfth Issuance
Date of Issuance
Number of bonds subscribed
Nominal value
Term
Interest rate
Interest payment
(6) Codensa S.A.
: April 22, 2004.
: 4,000 bonds.
: 5,000 (new soles) each.
: 10 years.
: VAC + 5.4375%.
: Semi-annual.
: June 9, 2004.
: 4,000 bonds.
: 5,000 (new soles) each.
: 5 years.
: 8.75%.
: Semi-annual.
: June 9, 2004.
: 4,000 bonds.
: 5,000 (new soles) each.
: 10 years.
: VAC + 6.50%.
: Semi-annual.
: June 24, 2004.
: 8,000 bonds.
: 5,000 (new soles) each.
: 10 years.
: VAC + 6.50%.
: Semi-annual.
Condensa S.A. Issued bonds on March 11, 2004.
First Issuance
Issuer
Issued securities
Amount Issued
1st principal payment
Nominal interest rate
Interest payment
: Codensa.
: Securities negotiable in Colombian pesos.
: 500,000,000,000 Colombian pesos.
: maturity in 2009 for 50,000,000,000 Colombian pesos.
: 10.91% average annual rate.
: Quarterly.
Interest earned at the closing of the fiscal year is M$71,050, and is presented in current
liabilities.
2nd principal payment
Nominal interest rate
Interest payment
: Maturity in 2011 for 200,000,000,000 Colombian pesos.
: 12.09% average annual rate.
: Quarterly.
Interest earned at the closing of the fiscal year is M$316,497, and is presented in current
liabilities.
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3rd principal payment
Nominal interest rate
Interest payment
(7) Edesur S.A.
: Maturity in 2014 for 250,000,000,000 Colombian pesos.
: 12.28% average annual rate.
: Quarterly.
Interest earned at the closing of the fiscal year is M$402,350, and is
presented in the current liabilities.
On October 5, 2004, under its medium-term certificate of indebtedness Issuance program, the Corporation Issued negotiable liabilities in
Argentinean pesos for a total amount of MUS$40,302 in two 18-month series (class 5) and 1-3-year series (class 6), respectively.
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
Issuer
Issued securities
Amount Issuance
Principal due
Nominal interest rate
Interest payment
: Edesur S.A.
: Negotiable liabilities in Argentinean pesos.
: MUS$13,434.
: Maturity in 2006.
: 8.5% average annual rate.
: Semi-annual.
: Edesur S.A.
: Negotiable liabilities in Argentinean pesos.
: MUS$26,868.
: Maturity in 2007.
: 4.0% minimum annual nominal rate.
: Quarterly.
(8) Compañía de Electricidade do Rio de Janeiro S.A.
On July 28, 2004, the Corporation issued liabilities in reales for a total amount of R$294,000,000 in a 3-year term series.
Issuer
Issued securities
Amount Issuance
Principal due
Nominal interest rate
Interest payment
(9) Coelce S.A.
: Compañía de Electricidade do Rio de Janeiro S.A. S.A.
: Liabilities negotiable in reales.
: R$294,000,000.
: Maturity in 2007.
: 20.64% average annual rate.
: Quarterly.
On February 29, 2004, the Corporation issued liabilities in reales for a total amount of MR$88,500 in a 12-year term series.
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payment
: Coelce S.A.
: Negotiable securities in reales.
: MR$88,500.
: Maturity in 2012.
: 116% x CDI average annual rate.
: Semi-annual.
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(10) Endesa Chile S.A.
(i)
Our Subsidiary Endesa - Chile S.A. currently has 5 outstanding public bond issues on the domestic market on the following dates:
•
•
•
•
•
On September 12, 1988 , it registered in the SVS ( superintendencia de valores y seguros) , first issuance of bonds worth U.F. 5,000,000
under No. 105 ; this was totally placed a t December 31, 1988. This issuance is totally paid on september 1 , 2000.
On August 24 , 1989 , it registered the second bond issuance worth U.F. 6, 000.000 , under No.111 ; this was totally placed at December
31 , 1990. This issuance is totally paid at October 1 , 2001.
On December 7 1990, it registered the third issurance of bonds worth U.F. 4,000,000 under No. 131. U.F. 2,030,000 of this issuale
had been placed at December 31 1997. The remaining balance of U.F. 1,970,000 has been cancelled, because its placement deadline
has expired.
On August 9 2001, it registered the fourth bond issuance worth U.F: 7,500,000 under No. 264; this was totally placed at December
31 2001.
On November 26 2002, it registered the fifth bond issuance worth U.F. 8,000,000 under Nos. 317 and 318 and then amended it on
October 2 2003; this issuale was totally placed at December 31, 2003.
Risk rating of the issued bonds is as follows as of December 31, 2004:
- Feller-Rate Clasificadora de Riesgo Ltda.
- Comisión Clasificadora de Riesgo
- Fitch Chile Clasificadora de Riesgo Ltda.
Category
A+
A+
A+
ISSUANCE TERMS
Third Issuance
Issuer
Securities issued
Issuance Value
Indexation
Amortization period
Capital amortization
Early Redemption
Nominal interest rate
Interest Payments
: Empresa Nacional de Electricidad S.A.
: Bearer bonds in local currency, denominated in Unidades de Fomento
: Four million Unidades de Fomento (UF4,000,000) divided into:
- Series C-1: 120 bonds at UF10,000 each
- Series C-2: 800 bonds at UF1,000 each
- Series D-1: 120 bonds at UF10,000 each
- Series D-2: 800 bonds at UF1,000 each
: Based on variations in Unidad de Fomento index
: Series C-1 and C-2: 15 years (5-year grace year and 10 years to pay off principal).
Series D-1 and D-2: 20 years (5-year grace year and 15 years to pay off principal).
: Series C-1 and C-2: 20 consecutive installments payable semi-annually, starting April 1, 1996.
Series D-1 and D-2: 30 consecutive installments payable semi-annually, starting May 1, 1996.
Paydown installments are incremental
: As elected by the issuer, starting May 1, 1996 and only on the interest payment and amortization dates.
: 6.8% annually upon expiration, compound and actual rate per semester on outstanding principal,
readjusted by the value of the Unidad de Fomento. The applicable semi-annual interest rate will
be equal to 3.34409%.
: Interest will be paid semi-annually each May 1 and November 1, starting May 1, 1991. Accrued
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Guarantee
Placement period
Fourth Issuance
Issuer
Securities issued
Issuance Value (1)
Readjustment base
Amortization period
Early redemption
Nominal interest rate
Interest payment
Guarantee
Placement period
interest as of December 31, 2004, 2003 and 2002 amounts to ThCh$201,501, ThCh$228,969 and
ThCh$254,277 respectively, and is shown under current liabilities.
: There is no specific collateral ization, however, a general guarantee collateralizes all the issuer’s assets.
: 48 months from the registration date in the Chilean Securities Register of the Superintendency
of Securities and Insurance.
: Empresa Nacional de Electricidad S.A.
: Bearer bonds in local currency, denominated in Unidades de Fomento
: Up to seven and a half million (UF7,500,000) divided into:
Series E-1: 1,500 bonds at UF1,000 each.
Series E-2: 600 bonds at UF10,000 each.
Series F: 200 bonds at UF10,000 each.
: Variation in the UF
: Series E-1 and E-2: August 1, 2006.
Series F: August 1, 2022.
: Only in the Series F case, beginning February 1, 2012.
: 6.2% annually, compounded semi-annually and effective on the outstanding principal adjusted
for the value of the Unidad de fomento. The semi-annual interest rate will be 3.0534%.
: Accrued interest as of December 31, 2003 amounts to ThCh$3,304,726 (ThCh$3,309,694 in 2003
and ThCh$3,308,044 in 2002) which is shown under current liabilities.
: There is no specific collateralization; however, a general guarantee covers all the issuer’s assets
: 36 months from the registration date in the Chilean Securities Register of the Superintendency
of Securities and Insurance
(1)
Through a cross currency swap, the UF debt was exchanged for US dollar debt, leaving a net unrealized gain of ThCh$8,089,738 as
of December 31, 2004 (ThCh$4,964,116 in 2003) which is included in other assets.
Fifth Issuance
Issuer
Securities issued
Amount of issuance
Readjustment base
Amortization period
Pre-redemption
Nominal interest rate
Series H
Placement deadline
Security
Interest payment
: Empresa Nacional de Electricidad S.A.
: Dematerialized bearer bonds in local currency, expressed in Unidades de Fomento.
: Eight million Unidades de Fomento (U.F. 8,000,000) divided into:
- Series G: 4,000 bonds U.F. 1,000 each.
- Series H: 4,000 bonds U.F. 1,000 each.
: Variation in Unidad de Fomento.
: Series G: October 15, 2010.
Series H: Six-monthly and successively as of April 16, 2010.
: Only for series G bonds, as of October 16, 2004.
: Series G: 4.8% per year, compounded every six months and effective on the principal not fully
paid adjusted by the value of the Unidad de Fomento. The interest rate to be applied every six
months will be 2.3719%.
: 6.2% per year, compounded every six months and effective on the principal not fully paid adjusted
by the value of the Unidad de Fomento. The interest rate to be paid every six months will be 3.0534%.
: 36 months as of date of registration in Securities Register of the Superintendency of Securities
and Insurance.
: No specific security, except for general security of all the issuer’s properties.
: Interest will be paid semi-annually, due on April 15 and October 15 of each year starting from April
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15, 2004. Interest accrued at year-end is ThCh$1,565,822 (ThCh$1,568,167 in 2003) and is
presented in current liabilities.
(ii)
Endesa Chile S.A. has issued and placed four public offerings of bonds in the international market as follows:
First Issuance
Issuer
Securities issued
Issuance Value
Readjustment
Amortization period
Nominal interest rate
Interest Payments
Second Issuance
Issuer
Securities issued
Issuance Value
Readjustment
Principal due
Nominal interest rate
Interest Payment
Third Issuance
Issuer
Securities issued
Issuance Value
Readjustment
Principal due
Nominal interest rate
Interest Payment
Fourth Issuance
Issuer
Securities issued
Amount of issuale
: Empresa Nacional de Electricidad S.A.
: Marketable securities denominated in US$(Yankee bonds) in the US market.
: Six hundred and fifty million US Dollars (US$650,000,000) divided into:
Series 1: US$230,000,000
Series 2: US$220,000,000
Series 3: US$200,000,000
: Variation in the US Dollar
: Series 1 matures on February 1, 2027: Series 2 matures on February 1, 2037 (Put Option on February
1, year 2009, on which date the holders may redeem 100% of bonds plus accrued interest).
Series 3 matures on February 1, 2097.
: Series 1: 7.875% annually
Series 2: 7.325% annually
Series 3: 8.125% annually
: Interest will be paid semi-annually each February 1 and August 1 annually, starting January 27,
1997. Accrued interest as of the year end amounts to ThCh$11,723,401 (ThCh$12,801,201 in 2003
and ThCh$15,646,787 in 2002), which is shown under current liabilities.
: Empresa Nacional de Electricidad S.A.
: Marketable securities denominated in US$(Yankee bonds) in the US market.
: Four hundred million US Dollars (US$400,000,000)
: Variation in the US Dollar
: Series 1 matures on July 15, 2008
: Series 1: 7.75% annually
: Interest will be paid semi-annually each January 15 and July 15 annually, starting January 15, 1999.
Accrued interest as of the year end amounts to ThCh$7,919,724 (ThCh$8,647,830 in 2003 and
ThCh$9,920,363 in 2002), which is shown under current liabilities.
: Empresa Nacional de Electricidad S.A.
: Marketable securities denominated in US$(Yankee bonds) in the US market.
: Four hundred million US Dollars (US$400,000,000).
: Variation in the US Dollar
: Series 1 matures on April 1, 2009.
: Series 1: 8.502% annually
: Interest will be paid semi-annually each October 1 and April 1 annually, starting October 1, 1999.
Accrued interest as of the year end amounts to ThCh$4,737,900, ThCh$5,173,483 and ThCh$6,323,499
in 2004, 2003 and 2002, respectively, which is shown under current liabilities.
: Empresa Nacional de Electricidad S.A.
: Electronic negotiable bonds expressed in American dollars on the American and European markets,
under rules “Rule 144A” and “Regulation S”.
: Six hundred million US dollars (US$600,000,000) divided into:
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
159
Adjustment
Principal due
Nominal interest rate
Payment of interest
Series August 1, 2013: US$400,000,000
Series August 1, 2015: US$200,000,000
: Variation in US dollar.
: Series of ThMUS$400 total maturity on August 1 2013.
: Series of ThMUS$200 total maturity on August 1 2015.
: Series of ThMUS$400 8.35% per year.
Series of ThUS$400 8.625% per year.
: Interest will be paid semi-annually on February 1 and August 1 each year starting from July 23,
2003. Interest accrued at year-end was ThCh$11,763,463 (ThCh$13,444,908 in 2003) and presented
in current liabilities.
The risk rating of these bonds is as follows as December 31, 2004:
- Standard & Poor’s
- Moodys Investors Services
- Fitch
Repurchase of Yankee Bonds
Category
BBB-
Ba 2
BBB-
Endesa Chile Internacional, a 100% subsidiary of Endesa, made a tender offer in November 2001, for the total or partial purchase, in cash,
of the following bond issuale in US dollar (Yankee Bonds) made by its parent company, Endesa.
•
•
Series 1: ThCh$230,000 at 30 years, maturing in 2027.
Series 3: ThCh$200,000 at 100 years, maturing in 2097.
As a result of the offer which expired on November 21, 2001, series 1 and series 3 bonds, for ThUS$21,324 and ThUS$134,828, respectively,
were purchased, whose nominal values amounted to ThUS$24,119 and ThUS$159,584 for each series.
(11) Subsidiaries of Endesa Chile S.A.
(I)
Endesa Chile Internacional issued Yankee Bonds on April 1, 1996.
Risk rating of the bond issuance is as follows as of December 31, 2004:
- Standard & Poor’s
- Moodys Investors Services
Category
BBB-
Ba 2
ISSUANCE TERMS
First Issuance
Issuer
Securities issued
Issuance Value
Principal due
Nominal interest rate
Interest Payments
: Endesa Chile Internacional.
: Marketable securities denominated in US$(150,000 bonds).
: One hundred and fifty million Dollars (US$150,000,000):
: Maturity as of April 1, 2006
: 7.2 % annually in arrears.
: Interest will be paid semi-annually in arrears starting October 1, 1996. Accrued interest as of the
year end amounts to ThCh$1,504,980 (ThCh$1,643,342 in 2003 and ThCh$1,885,160 in 2002)
and is shown under current liabilities.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
160
Guarantee
: Guarantee from Empresa Nacional de Electricidad S.A.
As of July 24, 2000, the first issuale of Eurobonds (European Medium Term Note Programme) was registered in England for 1,000 million
Euros.
ISSUANCE TERMS
First Registration
Securities registered
Issuance value
Principal due
Nominal interest rate
Interest payments
: 1,000 million Euros
: Euros 400,000,000 (*)
: Principal due July 24, 2003
: Euribor + 0.80%
: Quarterly beginning October 24, 2000 in arrears. Accrued interest as of December 31, 2004,
2003 and 2002 amounts to ThCh$0, ThCh$0 and ThCh$2,391,942 respectively and is shown in
Guarantee
: Empresa Nacional de Electricidad S.A.
current liabilities.
(*)
By way of a cross-currency swap operation, the debt in Euros was exchanged for U.S. dollar debt.
At December 31, 2004, this issuance was totally cancelled.
(II)
Edegel S.A. issued bonds on June 4, 1999, February 15, 2000, June 14, 2000 and November 27, 2000, August 22, 2001, June 6, 2003,
September 4, 2003, October 29, 2003, December 12, 2003, January 26, 2004, February 27, June 18, 2004 and July 26, 2004 as per
the following:
First Issuance
Issuer
Securities issued
Issuance value
Principal due
Nominal interest rate
Interest payments
Issuer
Securities issued
Issuance value
Principal due
Nominal interest rate
Interest payments
Issuer
Securities issued
Issuance value
Principal due
Nominal interest rate
Interest payments
: Edegel S.A.
: Marketable securities denominated in US$(120,000 bonds).
: US$120,000,000
: June 3, 2007, February 14, 2007, June 13, 2006 and November 21, 2005 respectively.
: 8.75%, 8.41%, 8.75% and 8.46% annually
: Interest will be paid semi-annually, starting December 3, 1999. Accrued interest as of December
31, 2004, 2003 and 2002 amounts to ThCh$831,884, ThCh$1,018,802 and ThCh$1,351,145 and
is shown in other current liabilities.
: Edegel S.A.
: Marketable securities denominated in new soles (20,000 bonds).
: 100,000,000 new soles
: Maturity as of June 6, 2005.
: 6.0% annually
: Interest will be paid semi-annually. Accrued interest as of December 31, 2004, 2003 and 2002
amounts to ThCh$67,914, ThCh$70,282 and ThCh$0 respectively and is shown in other current
liabilities.
: Edegel S.A.
: Marketable securities denominated in new soles (10,000 bonds).
: 50,000,000 new soles
: Maturity as of May 5, 2006.
: 4.13% annually
: Interest will be paid semi-annually. Accrued interest as of December 31, 2004, 2003 and 2002
amounts to ThCh$112,835, ThCh$116,771 and ThCh$0, respectively and is shown in other current
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
Issuer
Securities issued
Amount of issuance
Principal due
Nominal interest rate
Interest payments
Issuer
Securities issued
Amount of issuance
Principal due
Nominal interest rate
Interest payments
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payments
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payments
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payments
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payments
161
liabilities.
: Edegel S.A.
: Negotiable Instruments in Nuevos Soles (10,000 bonds)
: Fifty million nuevos soles (NS50,000,000).
: Total maturity at October 30, 2006.
: 4.875% per year.
: Interests will be paid semi-annually. Interests accrued at year-end is ThCh$68,975, (ThCh$72,570
in 2003) and is presented in current liabilities.
: Edegel S.A.
: Negotiable instruments in Nuevos Soles (10,000 bonds)
: Fifty million Nuevos Soles (NS50,000000).
: Total maturity at December 12, 2006.
: 4.75% per year.
: Interests will be paid semi-annually. Interests accrued at year-end is ThCh$20,162 (ThCh$22,915
in 2003) and is presented in current liabilities.
: Edegel S.A.
: Negotiable securities in dollars (10,000 bonds.)
: Ten million (US$10,000,000.)
: Total maturity on January 26, 2009.
: Due annually 3.75%.
: Semi-annual. Interest earned at the closure of the fiscal year is M$89,416 and presented in current
liabilities.
: Edegel S.A.
: Negotiable securities in new soles (6,000 bonds.)
: Thirty million new soles (NS 30,000,000.)
: Total maturity on December 12, 2006.
: Due annually 5.875%.
: Semi-annual. Interest earned at the closing of the fiscal year is M$102,242 and presented in current
liabilities.
: Edegel S.A.
: Negotiable securities in new soles (4,000 bonds.)
: Twenty million new soles (NS 20,000,000.)
: Total maturity on June 18, 2008.
: Due annual 8.5%.
: Semi-annual. Interest earned at the closing of the fiscal year is M$10,423 and presented in current
liabilities.
: Edegel S.A.
: Negotiable securities in dollars (10,000 bonds.)
: Ten million dollars (US$10,000,000.)
: Total maturity on July 26, 2009.
: Due annual 4.78%.
: Semi-annual. Interest earned at the closing of the fiscal year is M$88,492 and presented in current
liabilities.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
162
(III) Emgesa S.A. issued bonds on October 8, 1999 and July 9, 2001, the first issuance, and on February 26, 2003, the second issuance as
per the following:
First Issuance
Issuer
Securities issued
Issuance Value
Principal due
Interest nominal rate
Interest payment
Second Issuance
Issuer
Securities issued
Issuance value
Principal due
Nominal interest rate
Interest payments
: Emgesa S.A.
: Marketable securities denominated in Colombian pesos
: $Col 530,000,000,000
: Maturities between 2006 and 2009 amount to Col$449,554,880.
: 10.77% annual average rate
: Interest will be paid semi-annually. Accrued interest as of December 31, 2004, 2003 and 2002
amounts to ThCh$1,771,428, ThCh$4,522,072 and ThCh$5,575,837 and is shown under current
liabilities.
: Emgesa S.A.
: Marketable securities denominated in Colombian pesos
: $Col 50,000,000,000
: Maturity as of July 26, 2006.
: 15.18% annual average rate
: Interest will be paid annually. Accrued interest as of December 31, 2004, 2003 and 2002 amounts
to ThCh$2,261,361, ThCh$2,469,433 and ThCh$228,760 respectively and is shown in other current
liabilities.
(IV) Central Hidroeléctrica Betania S.A. E.S.P. issued bonds on November 11, 2004, completing the first issuale.
First issuale
Issuer
Issued securities
Amount issued
Principal due
Nominal interest rate
Interest payments
: Central Hidroeléctrica Betania S.A. E.S.P.
: Straight bonds in Colombian pesos.
: 400,000,000,000 Colombian pesos.
: Maturity between 2009 and 2011, for 300,000,000,000 Colombian pesos.
: 12.4%
: Quarterly and annual. Interest earned at the closing of the fiscal year is M$1,197,295 and is
presented in current liabilities.
Amortized bond discounts of Enersis S.A. and its affiliates of ThCh$20,072,691 and ThCh$19,358,573 as of September 31, 2003 and 2004,
respectively are included in Other Assets (see Note 14).
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
163
N OTE 19. ACCRU ED E XPENSES
N OTE 20. SE VER ANCE I N D EM N ITIES
a) Short-term accruals:
Accrued expenses included in current liabilities are as
follows:
Long-term accruals include employee severance indemnities,
calculated in accordance with the policy described in Note 2n. An
analysis of the changes in the accruals in each year is as follows:
As of December 31,
2003
ThCh$
2004
ThCh$
As of December 31,
2003
ThCh$
2004
ThCh$
Bonus and other employee benefits
24,444,587
26,066,606
Opening balance as of January 1
8,610,121
10,636,360
Litigation and other contingencies
4,922,735
4,305,757
Increase in accrual
Construction and other
2,779,622
-
Transfer to short-term
Energy purchases from others
6,563,565
2,487,185
Payments during the period
2,871,119
1,963,414
(42,084)
(95,654)
(537,174)
(1,491,583)
Pension accruals
Suppliers and services
Others
Total
1,818,240
1,140,558
13,309,688
8,300,418
Total
1,208,393
2,032,593
55,046,830 44,333,117
10,901,982 11,012,537
b)
Long-term accruals:
As of December 31,
2003
ThCh$
2004
ThCh$
Accrued monthly corporate and other taxes
7,830,827
7,450,766
Post-retirement benefits-Chilean subsidiaries
11,685,741
16,024,333
Post-retirement benefits (Cerj Coelce)
61,973,808
53,776,105
Severance indemnity
Labor contingencies (Cerj)
10,901,982
11,012,537
162,848,093 152,182,968
Post-retirement benefits-foreign subsidiaries
65,942,279
68,620,416
Others
Total
4,169,678
1,958,148
325,352,408 311,025,273
During the 2004 fiscal year, bad debt write-offs were
ThCh$2,587,887 (ThCh$3,275,265 in 2003).
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
164
N OTE 21. M I N O RIT Y I NTEREST
a) Minority shareholders’ participation in the shareholders’ equity of the Company’s subsidiaries is as follows:
Company
Aguas Santiago Poniente
Cam Argentina S.A.
Cam Colombia S.A.
Capital de Energía S.A.
Central Hidroeléctrica Betania S.A.
Central Cachoeira Dourada
Central Costanera S.A.
Chilectra S.A.
Cía. Eléctrica San Isidro S.A.
Cía. Peruana de Electricidad S.A.
Codensa S.A.
Compañía de Electricidade do Rio de Janeiro S.A.
Companhia Energetica Do Ceara - Coelce
Constructora y Proyectos Los Maitenes S.A.
Edegel S.A.
Edelnor S.A.
Edesur S.A.
Elesur S.A.
Emgesa S.A.
Empresa Eléctrica Pangue S.A.
Endesa
Endesa Argentina S.A.
Generandes Perú S.A.
Hidroeléctrica El Chocón S.A.
Hidroinvest S.A.
Ingendesa S.A.
Inversiones Distrilima S.A.
Investluz S.A.
Luz de Bogotá S.A.
Pehuenche S.A.
Soc. Agrícola de Cameros Ltda.
Soc. Agrícola Pastos Verdes Ltda.
Túnel El Melón S.A.
Total
ThCh$
-
Equity
ThCh$
As of December 31, 2003
Participation
%
0.00%
0.10%
0.00%
49.10%
14.38%
0.39%
35.74%
1.76%
50.00%
49.00%
51.52%
27.46%
43.41%
45.00%
36.44%
40.00%
34.11%
0.00%
51.52%
5.02%
40.02%
0.01%
40.37%
34.81%
30.07%
2.36%
31.61%
37.55%
55.00%
7.35%
42.50%
45.00%
0.05%
-
526,322
2,325,024
476,360,496
438,238,156
416,599,853
173,721,282
437,157,882
45,055,766
33,824,461
847,938,214
457,564,052
546,789,747
(561,663)
557,722,052
227,179,203
590,358,954
-
815,270,848
87,532,641
1,529,985,766
58,412,739
309,802,801
206,365,348
85,746,919
2,625,142
135,303,911
293,938,943
499,679,635
199,166,284
7,091,001
56,659,804
(6,702,981)
526
30
233,893,003
63,009,005
1,641,902
62,079,140
7,636,110
22,527,884
16,573,986
436,861,205
125,649,583
237,362,977
(252,749)
203,255,109
90,871,681
201,359,739
420,002,269
4,390,812
612,286,163
5,841
125,064,355
71,835,778
25,784,098
62,019
42,769,567
110,374,073
274,823,805
14,638,722
3,013,675
25,496,913
(3,352)
-
Total
ThCh$
Equity
ThCh$
2,138,763
490,904
1,404,091
433,491,652
396,701,579
360,922,632
164,571,235
457,376,118
52,472,376
26,694,010
805,502,466
523,890,321
479,452,075
(1,253,478)
486,331,290
178,099,675
523,523,726
56,688,517
738,223,906
78,452,150
1,568,897,981
53,515,263
276,210,577
179,753,696
72,645,379
2,362,755
106,797,362
262,696,532
-
190,683,185
7,064,914
59,590,252
(8,422,193)
As of December 31, 2004
Participation
%
45.00%
0.10%
0.00%
49.00%
14.38%
0.39%
35.74%
1.76%
50.00%
49.00%
78.19%
18.77%
43.41%
45.00%
36.44%
40.00%
34.11%
0.00%
51.52%
5.02%
40.02%
0.01%
40.37%
34.81%
30.07%
2.36%
31.61%
37.55%
0.00%
7.35%
42.50%
45.00%
0.05%
962,443
492
19
212,410,909
57,036,960
1,422,468
58,809,379
7,990,673
26,236,188
13,080,065
629,785,730
98,358,372
208,131,503
(576,779)
177,237,603
71,239,870
178,563,568
609
380,310,072
3,935,317
627,858,471
5,352
111,503,503
62,572,262
21,844,465
55,820
33,758,645
98,642,819
-
14,015,214
3,002,588
26,815,613
(4,211)
Total
3,433,013,869
3,125,006,002
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
b) Minority shareholders’ participation in the net (income) or loss of the Company’s subsidiaries is as follows:
165
Company
Aguas Santiago Poniente
Cam Argentina S.A.
Cam Colombia S.A.
Capital de Energía S.A.
Central Hidroeléctrica Betania S.A.
Central Cachoeira Dourada
Central Costanera S.A.
Chilectra S.A.
Cía. Eléctrica San Isidro S.A.
Cía. Peruana de Electricidad S.A.
Codensa S.A.
Cía. do Electricidade do Río do Janeiro
Companhia Energetica Do Ceara - Coelce
Constructora y Proyectos Los Maitenes S.A.
Edegel S.A.
Edelnor S.A.
Edesur S.A.
Elesur S.A.
Emgesa S.A.
Empresa Eléctrica Pangue S.A.
Endesa
Endesa Argentina S.A.
Generandes Perú S.A.
Hidroeléctrica El Chocón S.A.
Hidroinvest S.A.
Ingendesa S.A.
Inversiones Distrilima S.A.
Investluz
Luz de Bogotá S.A.
Pehuenche S.A.
Soc. Agrícola de Cameros Ltda.
Soc. Agrícola Pastos Verdes Ltda.
Túnel El Melón S.A.
As of December 31, 2003
Participation
%
Total
ThCh$
Net income
ThCh$
-
(64,331)
(745,590)
(8,829,230)
1,730,620
(4,422,415)
(28,497,368)
(52,756,294)
(13,507,303)
(2,260,699)
(18,470,888)
101,242,812
10,442,705
923,958
(32,678,917)
(13,404,450)
27,778,921
-
(22,776,713)
(38,094,663)
(80,084,185)
(39,291,822)
(29,270,349)
(13,950,752)
(7,282,633)
(1,641,617)
(9,078,950)
8,899,063
(4,311,603)
(46,943,144)
89,881
(808,321)
2,322,960
-
-
0.10%
0.001%
49.10%
14.38%
0.39%
35.74%
1.76%
50.00%
49.00%
51.52%
27.46%
43.41%
45.00%
36.44%
40.00%
34.11%
(65)
(10)
(4,335,152)
248,825
(17,430)
(12,560,325)
(922,456)
(6,753,652)
(1,107,742)
(9,516,276)
27,801,828
4,533,208
415,781
(11,909,439)
(5,361,780)
9,474,840
-
-
51.52%
5.02%
40.02%
0.01%
40.37%
34.81%
30.07%
2.36%
31.61%
37.55%
55.00%
7.35%
42.50%
45.00%
0.05%
(11,733,857)
(1,910,904)
(32,048,951)
(3,929)
(11,816,153)
(4,856,257)
(2,189,888)
(38,783)
(2,869,857)
3,341,598
(2,371,382)
(3,450,321)
38,200
(363,745)
1,161
Total
ThCh$
Net income
ThCh$
108,643
65,282
(907,447)
(13,373,141)
4,639,241
(14,818,479)
(5,476,455)
(77,321,577)
(14,213,098)
(119,602)
(56,675,131)
30,959,195
16,071,989
720,068
(17,792,745)
522,853
17,129,823
1,270,758
(28,156,505)
(4,839,958)
(83,788,756)
452,791
(19,175,749)
3,492,111
6,762,318
(947,753)
(523,706)
6,494,157
As of December 31, 2004
Participation
%
45.00%
0.10%
0.00%
49.00%
14.38%
0.39%
35.74%
1.76%
50.00%
49.00%
78.19%
18.77%
43.41%
45.00%
36.44%
40.00%
34.11%
0.00%
51.52%
5.02%
40.02%
0.01%
40.37%
34.81%
30.07%
2.36%
31.61%
37.55%
0.00%
7.35%
42.50%
45.00%
0.05%
48,889
65
(12)
(6,552,839)
667,021
(58,403)
(1,957,006)
(1,353,288)
(7,106,549)
(58,605)
(44,311,706)
5,812,469
6,976,896
324,031
(6,484,352)
209,141
5,842,643
14
(14,505,359)
(242,782)
(33,531,486)
45
(7,741,062)
1,215,604
2,033,429
(22,391)
(165,543)
2,438,563
(27,870,640)
26,087
(1,217,491)
1,719,213
(2,048,492)
11,087
(547,871)
860
-
-
Total
(80,282,913)
(101,106,989)
N OTE 22. SHAREH O LD ERS’ EQ U IT Y
a) Paid capital
The Extraordinary General Meeting of Shareholders of Enersis
held on March 31, 2003 approved a capital increase of about
US$2,000 million. The issue was registered in the Securities Register
on May 23, 2003 under No. 686 for Ch$1,473,225,403,563 pesos,
divided into 24,382,994,488 shares. The operation was structured
as follows:
1)
First preferential underwriting period (from May 31 to June 30),
in which shareholders registered in the company register at
2)
3)
May 26, 2003 have the option of subscribing to 2.9408 new
shares for each old one at a price of Ch$60.4202 per share.
Voluntary redemption of local bonds (from November 1 to 15),
in which holders of local 269 bonds (series B1 and B2) may
exchange their bonds for Enersis shares, according to the value
assigned by an independent expert and at placement price of
Ch$60.4202 per share.
Second preferential underwriting period (from November 20
to December 20), in which all Enersis shareholders registered
five working days before the start of this new period, except for
the controlling partner and its members, may participate.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
166
In this phase, shareholders may subscribe to the remaining
shares that were not underwritten at the close of the preferential
underwriting period and at the conclusion of the voluntary redemption
of local bonds. In this period, new issue shares may only be paid in
cash at the same price of Ch$60.4202 per share.
Once the deadline for the capital increase has expired
(December 30, 2003), its final amount will be the amount actually
underwritten and paid in.
At June 30, 2003, end date of the first preferential underwriting
period, 22,113,264,060 shares were underwritten for a sum of
Ch$1,336,087,841,061 equivalent to 90.69% of the total issue. Of
total shares underwritten in this preferential period, 14,406,840,511
shares were subscribe to by controlling shareholder Elesur for the
equivalent of Ch$870,464,185,043 and 7,706,423,549 shares by
minority shareholders for the equivalent of Ch$465,623,656,018.
Elesur underwrote and paid in its shares by capitalizing
financial loans that it held with Enersis on the date of underwriting.
The exchange was approved by the Extraordinary Shareholders’
Meeting on March 31, 2003, at 86.84% of its par value based on
an independent expert appraisal report performed pursuant to the
Chilean Company Law, with the difference being recorded as a share
premium of Ch$131,912,812,936.
The second preferential underwriting period in November
2003 involved the voluntary exchange of 269 bonds, series B1 and
B2. Holders converted Ch$63,656,586,836 into the equivalent of
893,612,466 first issues shares; the amounts underwritten were
determined by experts; capitalization was Ch$46,964,178,894 for
series B1 and Ch$7,028,065,024 for series B2, at Ch$60.4202 per
share. This operation resulting in recording a share premium of
Ch$6,247,821,056.
During the second preferential underwriting period,
1,244,542,758 shares equivalent to Ch$75,195,523,918 were
subscribed.
The second share underwriting period concluded on December
30, 2003 fielding a capital increase, in which 99.9% of the capital
authorized by the Extraordinary General Meeting of Shareholders,
in other words 24,360,146,365 shares, were subscribed, leaving
Enersis’ capital with a total of 32,651,166,465 subscribed and paid
in shares.
b) Dividends
During the years ended December 31, 2003 and 2004 the
Company no paid dividends.
c) Number of shares
As of December 31,
2003
Shares
Capital stock authorized
32,651,166,465
Capital stock issued and outstanding 32,651,166,465
2004
Shares
32,651,166,465
32,651,166,465
d) Subscribed and paid in capital is as follows:
As of January 1,
Intercompany loan capitalization
Bond exchange
Subscribed shares
As of December 31,
2004
ThCh$
2,283,404,124
2003
ThCh$
777,688,286
890,441,339
55,176,024
560,098,475
As of December 31,
2,283,404,124 2,283,404,124
e) Net losses from operations and accumulated net
income (losses) of development-stage subsidiaries
are as follows:
Company
Central Generadora
Termoelectrica Fortaleza S.A.
Total
As of December 31, 2004
Net income (loss)
for the period
ThCh$
Retained earnings
(accumulated deficit)
ThCh$
-
-
(2,673,664)
(2,673,664)
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
167
f) Other reserves
Other reserves at December 31, 2004 are composed of the following:
Reserve for entities using remeasurement method
Reserve for accumulated conversion differences
Reserve for Technical Bulletin No. 72 (1)
Initial
balance at
Reserve
Final
balance at
January 1, 2004
for the period
December 31, 2004
ThCh$
(10,499,405)
(15,814,072)
ThCh$
(4,435,524)
(103,832,123)
-
11,992,130
ThCh$
(14,934,929)
(119,646,195)
11,992,130
Total
(26,313,477)
(96,275,517)
(122,588,994)
(1) Corresponds to the reserve generated by the purchase of shares of Compañía de Electricidad de Río de Janeiro S.A. in 2004. This effect has been recorded in accordance with Technical Bulletin
No.72 of the Chilean Institute of Accountants.
Detail of changes in the reserve for accumulated conversion differences is as follows:
Cumulative translation adjustment
Initial
balance at
January 1, 2004
ThCh$
(15,814,072)
Reserve
for assets
ThCh$
(109,623,996)
Reserve for
liabilities
ThCh$
5,791,873
Final
balance at
December 31, 2004
ThCh$
(119,646,195)
Total
(15,814,072)
(109,623,996)
5,791,873
(119,646,195)
The detail of the accumulated conversion difference reserve at December 31, 2004 is as follows:
Distrilec Inversora S.A.
Inversiones Distrilima S.A.
Cía. Peruana de Electricidad S.A.
Edesur S.A.
Compañía de Electricidade do Rio de Janeiro S.A.
Luz de Bogotá S.A.
Investluz S.A.
Central Geradora Termelétrica Fortaleza S.A.
Enersis Energía de Colombia
Endesa Market Place
Endesa Argentina S.A.
Endesa Chile Interncional S.A.
Codensa S.A.
Endesa de Colombia S.A.
Central Costanera S.A.
Conosur S.A.
Capital de Energía S.A.
Ingendesa Do Brasil Ltda.
Total
ThCh$
(16,109,082)
(6,111,287)
(36,678)
(19,299,737)
(35,101,980)
2,361,312
(1,981,396)
(4,131,448)
(561,859)
376,205
8,772
(3,028,008)
(27,711,750)
70,212
(307,841)
(8,001,621)
(8,544)
(71,465)
(119,646,195)
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
168
N OTE 23. OTHER I N COME AN D E XPENSES
a)
The detail of other non-operating income is as follows:
Adjustments to investments in related companies
Gain on sale of property, plant and equipment
Gain on forward contracts and swaps
Services - projects and inspections
Penalties charged to contractors and suppliers
CDEC-SING power settlement gain (3)
Public lighting and telephone lines
Transportation and gas service income (San Isidro)
Cost recoveries
Reversal of contingencies provision and other provisions
Recoverable taxes
Effect of application of BT 64 (1)
Gain on sale of subsidiaries (2)
Indemnities and commissions
Dividend from investees
Other
-
Year ended December 31,
2003
2004
ThCh$
ThCh$
1,143,798
7,717,776
8,068,307
7,148,008
6,915,462
3,258,908
7,731,202
12,047,772
13,220,912
878,765
2,063,984
44,040,053
2,641,508
8,551,458
9,260,211
7,466,011
1,644,945
12,296,555
-
5,871,416
6,713,863
5,207,602
20,169,663
91,517,236
3,681,189
4,395,484
12,116,692
-
7,656,664
1,961,425
13,452,664
Total
195,206,651
133,632,882
(1) These amounts correspond to the net adjustments related to the translation of financial statements of foreign affiliates from the respective local country currency to US Dollars.
(2) Sale of Compañía Eléctrica del Rio Maipo S.A. and Infraestructura 2000 S.A.
(3) The amount recorded in 2004 corresponds to the result of re-liquidations of balances of power on a firm basis corresponding to 2000 April – 2004 March period (See Note 35). The amount
recorded in 2003 corresponds to interim re-liquidations of Energy and Power for transactions carried out in prior years.
b) Other non-operating expenses are as follows:
Adjustments to investments in related companies
Cost of sales – materials
Loss on sale of fixed assets
Effect of application of BT 64 (1)
Contingencies and litigation
SIC power settlement loss
Pension plan expense
Index UFIR Brasil Cerj
Penalties and fines
Cost of projects, inspections and other
Other taxes Colombia
Other taxes Argentina and Brazil
Loss on forward contracts and swaps
Write-off fixed assets
Others
Year ended December 31,
2003
2004
ThCh$
ThCh$
8,392,787
3,218,384
9,631,969
89,369,131
54,298,359
2,743,676
21,310,188
7,000,397
4,474,469
4,191,139
1,909,123
841,148
1,287,967
65,499,071
35,399,348
25,696,096
5,127,753
1,759,059
7,525,875
2,829,797
4,487,955
6,902,111
13,326,522
20,830,282
13,933,392
-
9,833,886
1,171,257
16,029,887
20,372,871
Total
252,038,400
207,355,499
(1)
These amounts correspond to the net adjustments related to the translation of financial statements of foreign affiliates from the respective local country currency to US Dollars.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 24. PRICE-LE VEL RESTATEMENT
The (charge) credit to income for price-level restatement is as follows:
Assets
Inventory
Current assets
Property, plant and equipment
Accounts receivable from subsidiaries
Investment in subsidiaries
Amortization of goodwill
Other assets
Price-level restatement of the income statement
Net credits - assets
Liabilities and Shareholders’ equity
Shareholders equity
Current and long-term liabilities
Minority interest
Accounts payable to subsidiaries
Non-monetary liabilities
Price-level restatement of the income statement
169
Index
I.P.C.
I.P.C.
U.F.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
U.F.
I.P.C.
I.P.C.
U.F.
I.P.C.
Year ended December 31,
2003
ThCh$
332,650
9,875,155
12,805
2004
ThCh$
2,607,088
5,081,800
2,249,081
23,951,380
53,701,497
1,806,586
2,040,182
6,415,892
34,323,162
70,973
(67,762)
3,039,752
4,505,287
17,229,094
97,268,124
2,850,718
1,128,728
78,761,023
189,661,169
(7,113,470)
(63,692,887)
(51,656,918)
(81,481,325)
(1,448,020)
(24,293,995)
(7,809,611)
(14,889,909)
I.P.C. - U.F.
(16,067,616)
(218,476)
I.P.C.
U.F.
I.P.C.
(95,620)
(74,620)
892,976
-
(32,896)
(5,828,559)
Net charge-liabilities and shareholders’ equity accounts
(83,372,899)
(190,438,047)
Net credits (charge) to income
(4,611,876)
(776,878)
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
170
N OTE 25. E XCHAN GE D IFFEREN CES
The (charge) credit to income for foreign currency translation is as follows:
Assets
Cash
Time deposits
Marketable securities
Accounts receivable, net
Prepaid expenses
Other current assets
Amounts due from related companies
Currency
US$
Euro
Other
US$
Other
US$
Other
US$
Euro
Other
US$
US$
Other
US$
Liabilities
Currency
Year ended December, 31
2004
ThCh$
2003
ThCh$
2,921,829
(1,562)
(244,829)
(26,806,295)
(7,095)
333,168
-
(6,260)
(6,131,516)
3,637
Short-term debt due to banks
and financial institutions
Current portion of long-term
debt due to banks
and financial institutions
(173,259)
(20,035)
(469,991)
33,656
(48,731)
(9,088)
(68,628)
(52,570)
-
(380,587)
Current portion of bonds payable
Current portion of bonds payable
Current portion of notes payable
Accounts payable
(64,208)
2,605,509
(1,389)
(82,475)
6,594
(5,402,853)
(126,401)
(10,432,016)
Year ended December, 31
2003
ThCh$
6,819,881
(3)
7,559,303
57,473
171,411
89,379
13,663,068
2,304,677
112,790
(47,008)
442,993
1,358,404
656,381
(999)
19,840
794,511
647,006
46
2004
ThCh$
(624,260)
-
2,222,240
14,655
(100,925)
1,206
213,448
518,049
75,120
1,929
725
817,379
184,185
1,748
(9,915)
77,793
-
49
111,386,102
40,257
1,033
14,394
114,398,645
6,121,987
(177,377)
11,123,478
(9,481,659)
19,693,149
3,748
450
905,122
44,375,245
1,554,147
1,679,494
(2,823,908)
-
US$
Other
US$
Yen
Other
Euro
US$
US$
US$
Euro
Other
US$
US$
Other
US$
US$
Other
Other
US$
Yen
Euro
Other
US$
US$
US$
US$
US$
Miscellaneous payables
Accrued expenses
Deferred income
Other current liabilities
Dividends payable
Long-term liabilities
Due to banks and
financial institutions
Bonds payable
Notes payable
Accounts payable
Other long-term liabilities
Forward
Non-current assets
Long-term receivables
Amounts due from related companies
Other assets
Forward contracts and swaps
US$
Other
US$
US$
US$
(12,688,930)
(228,007)
(29,633,969)
(209,371,894)
-
(4,288,417)
7,077
-
(32,823,991)
4,997,759
Total gain (loss)
(274,281,675)
(54,374,092)
Total gain (loss)
268,076,013 68,780,873
Exchange difference - net loss
(6,205,662) 14,406,781
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 26. SHARE ISSUAN CE COSTS
N OTE 27. C ASH FLOW STATEMENT
171
a)
Expenses incurred at the close of these financial statements
for issuing and placing the shares, outstanding at December
30, 2003, were recorded as described in Note 2 aa) and break
down as follows:
a) Other financing disbursements:
Appraisal services
Printing costs
Legal cost
Financial adviser
DCV commissions
Bank commissions
Risk classification services
As of December 31
2003
ThCh$
77,209
14,303
204,989
10,637,039
3,065
1,485,095
143,103
2004
ThCh$
77,209
14,303
204,989
10,734,121
3,065
1,968,639
143,103
Commissions on debt refinancing
Forward contract payments
Collar and collateral derivative contracts premiums
Payments to Siemens A.G. Germany
Payments to Santander Leasing
Others
Total
Total
12,564,803
13,145,429
b) Other receipts investment:
As of December 31
2003
ThCh$
2004
ThCh$
58,618,168
4,650,978
41,837,045
27,554,783
5,595,667
4,668,952
-
-
-
2,008,445
8,211,550
154,412
118,931,382 34,368,618
As of December 31
2003
ThCh$
2004
ThCh$
During the current fiscal year expenses for bank commissions
have been recorded for ThCh$469,460, and expenses for
financial consulting for ThCh$94,254 regarding capital
increase.
b)
Expenses incurred for issuing and placing debt instruments
incurred each year in placing bonds are as follows:
Taxes
Commissions
Financial adviser
Insurance issue
Others
As of December 31
2003
ThCh$
2,231,224
2,660,768
874,661
-
56,775
2004
ThCh$
-
-
381,109
93,708
Total
5,823,428
474,817
Receipts from loans granted to Infraestructura 2000
49,096,825
1,760,516
Capital return
Payments from OHL
Others
Total
1,260,879
-
-
38,552,256
675,341
261,588
51,033,045
40,574,360
c) Non-Cash Financing Transactions
Capital increase
On June 2, 2003 Elesur S.A. capitalized the loan that it held
with Enersis S.A. for ThCh$1,002,376,998, which transaction did
not generate a cash flow. Details of this transaction are explained
in Note 22a).
In November 2003 there was a voluntary exchange of bonds
in connection with the capital increase of Enersis. Holders converted
ThCh$63,656,587 into 893.612.466 first issue shares; this operation
did not generate any cash flow. Details of this transaction are referred
to in Note 22a).
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
172
N OTE 28. FI NANCIAL D ERIVATIVES
As of December 31, 2004 the Company and its subsidiaries held the following financial derivative contracts with financial institutions
with the objective of decreasing exposure to interest rate and foreign currency risk, as follows:
Type
Type
Nominal
derivative contract
amount
Date of
maturity
FR
FR
FR
FR
FR
OE
OE
S
S
S
S
S
S
S
S
S
S (1)
S (1)
US$
3,252,177
I quarter 05
Exchange rate
78,000,000
I quarter 05
Exchange rate
3,627,103
II quarter 05
Exchange rate
1,414,572
III quarter 05
Exchange rate
1,142,676
IV quarter 05
Exchange rate
123,000,000
I quarter 06
Interest rate
500,000,000
II quarter 06
Interest rate
5,000,000
III quarter 05
Interest rate
3,297,340
I quarter 05
Exchange rate
12,230,000
III quarter 05
Exchange rate
100,000,000
IV quarter 06
Exchange rate
10,000,000
IV quarter 07
Exchange rate
350,000,000
I quarter 14
Exchange rate
250,000,000
IV quarter 16
Exchange rate
50,000,000
II quarter 06
Exchange rate
3,807,000
III quarter 08
Exchange rate
50,000,000
III quarter 06
Exchange rate
50,000,000
III quarter 06
Exchange rate
CCTE
CCPE
CCTE
CCTE
CCTE
CCTE
CCTE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCPE
CCTE
CCTE
CI
CI
P/S
P
P/S
P/S
S
P/S
P/S
P
P
P
P
P
P
P
P
P
S
S
(1)
Fr = Forward, S = Swap
Sale /
Amount
Assets/Liabilities
Income
Accounts
Item
Purchase
Hedged item
Amount
Hedged item
Account
ThCh$
ThCh$
Amount
ThCh$
Realized
Unrealized
ThCh$
ThCh$
Bank obligations
2,005,638
2,005,638
-
Bonds
43,477,200
43,477,200
Other liabilities s/t
(152,911)
Bank obligations
2,243,331
2,243,331
Bank obligations
874,947
874,947
Bank obligations
708,394
708,394
-
-
-
-
-
-
-
-
-
222,775
-
-
-
Bank obligations
68,560,200
68,560,200 Other liabilities s/t other assets l/t
(312,040)
957,269
83,857
Bank obligations
278,700,000
278,700,000 Other liabilities s/t other assets l/t
(2,293,644)
(2,793,325)
(254,871)
Bank obligations
2,787,000
2,787,000
Other liabilities s/t
Bank obligations
1,837,937
1,837,937
Other liabilities s/t
Bank obligations
6,817,002
6,817,002
Other liabilities s/t
40,594
(189,432)
(814,873)
-
-
-
37,986
(190,216)
(818,416)
Bonds
55,740,000
55,740,000
Other liabilities l/t
(7,238,283)
341,449
(7,238,283)
Bank obligations
5,574,000
5,574,000
Other liabilities s/t
(490,392)
-
(319,440)
Bonds
Bonds
195,090,000
195,090,000
139,350,000
139,350,000
Other liabilities l/t
Other liabilities l/t
(15,541,547)
859,202
(15,541,547)
(522,520)
785,315
(522,520)
Bank obligations
27,870,000
27,870,000
Other liabilities l/t
Bank obligations
2,122,022
2,122,022
Other liabilities l/t
Other liabilities l/t
Other liabilities s/t
(264,903)
(414,821)
(1,191,862)
-
-
-
(3,576,016)
(427,587)
3,756,841
-
566,672
373,124
N OTE 29. COM M ITMENTS AN D CO NTI N GENCIES
Collateral held by third parties:
Guarantee
Creditors banks
Director Customs Office of Chile
Mitsubishi Corp.
Banco Estado
Subsidiary
Pangue S.A.
Pangue S.A.
San Isidro S.A.
Tunel el Melón S.A.
Mortgage and pledge Real Estate, properties
Bill of exchange
Chattel mortgage
Facilities
Pledge over 45%
of income
Soc. de Energía de la República Argentina
Endesa Argentina, Central Costanera Pledge
Mitsubishi
J.P. Morgan e Ing Barings
Central Costanera S.A.
Central Costanera S.A.
Banco Santander Central Hispano
Cono Sur S.A. (Cien)
Pledge
Pledge
Pledge
Shares
Facilities
Facilities
Shares
Miscellaneous payables
Endesa (Parent)
Bank bond
Syndicated loan Citibank N.A.
Pehuenche, Pangue, Celta
Financial guarantee
Guarantees of subsidiary obligations (1):
Commited assets
Balance payable of related debt
Release of guarantees
Type
Currency
Book value of
at December 31,
Type guarantee
collateral
Currency
2003
2004
2005
2006
2007
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
88,395,344
50,166
84,094,299
1,481,546
85,461,842
20,605,136
28,984,800
52,829,062
-
-
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
14,709,718
13,763,815
3,228,325 2,222,587 2,222,587
54,778
50,166
34,654,484
25,394,018
5,873,124
4,407,491
11,978,742
9,725,655
12,939,793
20,605,136
47,599,342
15,424,717
92,284,033
73,848,366
1,342,066
214,539
172,855,180
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Committed assets
Balance payable of related debt
Release of guarantees
Type
Currency Accounting
at December 31
Guarantee
Subsidiary
Relation
Value
Currency
2003
2004
2005
2006
2007
2008
J.P. Morgan & Co. Y C.S.F.B.
Endesa Chile Internacional
Subsidiary Guarantor
ThCh$
83,610,000 ThCh$
92,940,092 83,610,000
-
83,610,000
Mitsubishi Co.
Cía. Eléctrica San Isidro S.A.
Subsidiary Guarantor
ThCh$
25,394,018 ThCh$ 34,654,483 25,394,018
Banco Español de Crédito
Cía. Eléctrica Tarapacá S.A.
Subsidiary Guarantor
ThCh$
16,082,048 ThCh$ 22,573,634 16,082,048
ABN Bank
Cía. Eléctrica Tarapacá S.A.
Subsidiary Guarantor
ThCh$
- ThCh$
1,802,879
-
Banco Santander Central Hispano Cía. Eléctrica Conosur S.A.
Subsidiary Guarantor
ThCh$ 73,848,366 ThCh$ 92,284,033 73,848,366
-
-
-
-
-
-
-
-
-
-
-
25,394,018
-
16,082,048
-
-
-
73,843,366
(1) Unless otherwise stated, the guarantees in the table “Guarantees of Subsidiary Obligations” were provided by a subsidiary of the Company (the “Guarantor”) to a third party creditor that had
entered into a new obligation with another subsidiary (the “Subsidiary Debtor”). If the Subsidiary Debtor is unable to meet the requirements of the related obligation, the Guarantor will be
required to make future payments on behalf of the Subsidiary Debtor up to the remaining amount payable.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
173
Litigation and other legal actions:
Enersis S.A.
Plaintiff
:
:
Defendant
Court
:
Case/Identification :
Enersis S.A., Chilectra S.A., Empresa
Nacional de Electricidad S.A., Elesur S.A.
The Republic of Argentina
CIADI Arbitration Panel
(CIADI Case # ARB/03/21)
Compensation for losses caused to the Plaintiff’s investment in
the Republic of Argentina is requested in connection with the
participation in the power distribution concessionaire Edesur S.A. on
the grounds of violation of the Investment Protection and Promotion
Agreement entered into by the Republics of Chile and Argentina, and
the Argentinean Government behavior through the passing of Public
Emergency Law 25,561, dated January 6, 2002. The said behavior
has also seriously affected the economic and financial balance of
the Granting Contract between Edesur S.A. and the Argentinean
National State. The said Law authorized a re-negotiation process
of the Granting Contracts with the purpose of re-composing the
economic-financial equation affected by the conversion to pesos,
at US$1 = $1, of tariff values calculated in American dollars, and
the prohibition to apply biased tariff updating. In the practice, this
process has not been promoted by the Government, and no measures
to prevent losses for the Plaintiff have been formalized. Edesur S.A.
has been deprived of receiving the tariffs indicated in the regulations
and in the said Granting Contract, therefore being harmful to the
investment the Plaintiff companies have made.
Agreement entered into by the Republics of Chile, and Argentina and
the Argentinean Government behavior through the passing of Public
Emergency Law 25,561, dated January 6, 2002. The said behavior
has also seriously affected the economic and financial balance of
the Granting Contract between Edesur S.A. and the Argentinean
National State. The said Law authorized a re-negotiation process
of the Granting Contracts with the purpose of re-composing the
economic-financial equation affected by the conversion to pesos,
at US$1 = $1, of tariff values calculated in American dollars, and
the prohibition to apply biased tariff updating. In the practice, this
process has not been promoted by the Government, and no measures
to prevent losses for the Plaintiff have been formalized. Edesur S.A.
has been deprived of receiving the tariffs indicated in the regulations
and in the said Granting Contract, therefore being harmful to the
investment the Plaintiff companies have made.
Amount claimed by Chilectra S.A.: US$624,238,650.
Plaintiff
Defendant
:
:
Court
:
Case/Identification :
Soto Fernandez, Magali
Chilectra S.A. and Ingeniería Eléctrica Azeta
Ltda.
22nd Civil Court of Santiago
2907-2001
Process status: On october 18, 2004, a copy of the lack of jurisdiction
petition filed by the Republic of Argentina was received. On December
7, 2004 the said petition was answered and confirmation of the CIADI
jurisdiction was requested. Lack of jurisdicyion of the Arbitration Court
had been processed on the request of the Republic of Argentina.
Process status: On October 18, 2004, a copy of the lack of jurisdiction
petition filed by the Republic of Argentina was received. On December
17, 2004 the said petition was answered and confirmation of the CIADI
jurisdiction was requested. Lack of jurisdiction of the Arbitration Court
had been processed on the request of the Republic of Argentina.
Process status: Out-of-court agreement. The Plaintiffs were paid a
total amount of Ch$475,000,000. They abandoned the procedure
and the lawsuit ended.
LAWSUIT SETTLED
Amount involved: US$574,739,500.
Chilectra S.A.
Amount US$15,800,000.
Elesur S.A.
Plaintiff
:
:
Defendant
:
Court
Case/Identification :
Enersis S.A., Chilectra S.A., Empresa
Nacional de Electricidad S.A., Elesur S.A.
The Republic of Argentina
CIADI Arbitration Panel
CIADI Case ARB/03/21
Plaintiff
:
:
Defendant
Court
:
Case/Identification :
Enersis S.A., Chilectra S.A., Empresa
Nacional de Electricidad S.A., Elesur S.A.
The Republic of Argentina
CIADI Arbitration Panel
(CIADI Case ARB/03/21)
Compensation of losses caused to the Plaintiff’s investment in the
Republic of Argentina is requested in connection with the participation
in the power distribution concessionaire Edesur S.A. on the grounds
of non-fulfillment of the Investment Protection and Promotion
Summary of proceedings: Compensation of losses caused to the
Plaintiff’s investment in the Republic of Argentina is requested
in connection with the participation in the power distribution
concessionaire Edesur S.A. on the grounds of non-fulfillment of
the Investment Protection and Promotion Agreement entered
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
174
into by the Republics of Chile and Argentina, and the Argentinean
Government behavior through the passing of Public Emergency Law
25,561, dated January 6, 2002. The said behavior has also seriously
affected the economic and financial balance of the Granting Contract
between Edesur S.A. and the Argentinean National State. The said
Law authorized a re-negotiation process of the Granting Contracts
with the purpose of re-composing the economic-financial equation
affected by the conversion to pesos, at US$1 = $1, of tariff values
calculated in American dollars, and the prohibition to apply biased
tariff updating. In the practice, this process has not been promoted by
the Government, and no measures to prevent losses for the Plaintiff
have been formalized. Edesur S.A. has been deprived of receiving the
tariffs indicated in the regulations and in the said Granting Contract,
therefore being harmful to the investment the Plaintiff companies
have made.
Process status: On October 18, 2004, a copy of the lack of jurisdiction
petition filed by the Republic of Argentina was received. On December
17, 2004 the said petition was answered and confirmation of the CIADI
jurisdiction was requested. Lack of jurisdiction of the Arbitration Court
is being processed on the request of the Republic of Argentina.
Amount: US$98,731,260.
Edesur S.A.
Plaintiff
Defendant
Court
Case/Identification :
: Asociación Coordinadora de Usuarios
Consumidores y Contribuyentes – Ente
Nacional Regulador de la Electricidad (ENRE).
Edesur S.A.
:
: N°2 Federal Civil and Commercial
First Instance Court, Registry of the
Court N° 6, La Plata
38676/03
Summary of proceedings: The said institution filed a measure through
which it expects ENRE and EDESUR to be ordered to suspend of cabling
works in Quilmes, Province of Buenos Aires, as well as the company’s
“Sobral” sub-station due to the damage the installations may cause
to the population health.
Process status: A Resolution from La Plata Civil and Commercial
Federal Chamber of Appeal instructs that the First Instance Judge must
order EDESUR to report on the situation regarding electromagnetic
fields in connection with other sub-stations. Also, the company must
report regarding use of PCB, adjust the equipment containing it, as
well as the storage locations. Finally, the company must identify the
equipment and containers. The case file passed to first instance for
the above mentioned purposes, but EDESUR has not been notified
yet on the said requirement.
Amount: Undeterminable
Plaintiff
Defendant
Court
:
:
:
Edesur S.A.
Transportes Metropolitanos Gral. Roca.
First Instance National Commercial Court,
Registry of the Court N° 1
Case/Identification : 87934/03
Summary of proceedings : Edesur promoted an action to declare
settlements in public proper ty free-of-charge, taking into
consideration that the company Transportes Metropolitanos General
Roca S.A. (T.M.R.) intends to charge an annual rent for every crossing
or power line wiring along the rails (existing or future) over land
designated as railroad service property.
Process status: Edesur obtained from the corresponding Court a
precautionary measure through which the company is not obliged
to pay rent while the procedure is pending resolution. Taking into
consideration that the company Transportes Metropolitanos General
Roca S.A. attended in caution and, since this is a procedure related
to property, the proceedings were brought to the Commercial Court,
where the process still continues.
Amount: Undeterminable
Plaintiff
Defendant
Edesur S.A.
:
: Dirección de Vialidad of the Buenos Aires
:
Court
Case/Identification :
Province.
The National Supreme Court of Justice
E 213/01
Summary of proceedings: Edesur wants prevalence and application
of the rights established in its Contract to be declared precedent over
the provincial regulations.
Process status: A favorable ruling was obtained from the National
Attorney’s General Office, and the procedure is about to be ruled
upon by the Supreme Court of Justice.
Amount: Undeterminable
Plaintiff
Defendant
Court
Case/Identification :
Edesur S.A.
:
: Buenos Aires City Government (“GCBA”)
: N° 7 Administrative and Tax Court of Buenos
Aires City, Registry of the Court N° 13
2955/00
Summary of proceedings: The provision through which the Buenos
Aires City Government tries to charge an annual rent for each
underground transformation center installed by Edesur in public roads
is contested. At the same time, the provision tries to force Edesur
to cover the costs resulting from the removal of the said centers
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
175
whenever removal is necessary. The contested provision violates
the Granting Contract.
Case/Identification :
National Court, Registry of the Court N° 5.
1856/97
Process status: First instance favorable ruling was appealed against
by the. Parallel to the main procedure, Edesur filed an extraordinary
appeal to the Supreme Court sustaining the lack of competence of
the Buenos Aires City Courts and the competence of federal courts.
The Supreme Court of Justice ruled in favor and determined that
the Federal Administrative Court is competent to continue with the
lawsuit. Therefore, the proceedings are being transferred procedure
to the latter Court.
Summary of proceedings: In accordance with a provision in Power
Law 24065, the power sector concessionaire companies must pay
a significant rate to the Power Regulating National Agency with the
purpose of financing its controlling and regulating activities (the rate
is paid by EDESUR, among other concessionaires.)
Process status: First instance sentence was pronounced in favor of
the company. The counterparty appealed against the sentence.
Amount: Undeterminable
Amount: Undeterminable.
Plaintiff
Defendant
Court
Case/Identification :
Edesur S.A.
:
: Buenos Aires City Government (GCBA)
: N° 7 Administrative and Tax Court of the
City of Buenos Aires, Registry of the Court N° 13.
2956/01
Summary of Proceedings: To contest a GCBA provision through which
payment of procedure expenses on permits requested by Edesur for
the installation of its lines is demanded, as well as payment for the
corresponding inspections carried out by the GCBA, in addition to a
rent for using public roads with power systems for the provision of
power distribution public utilities.
Process status: Submission of trial briefings. Proceedings were
transferred to the Federal Administrative Court where the procedure
continues.
Amount: Undeterminable
Defendant
Court
Edesur S.A.
:
: N° 11 Federal Administrative First Instance
Case/Identification :
National Court, Registry of the Court N° 21.
142321/02
Summary of proceedings: The Users and Consumers Union wants a
modification of the type of rate applied to the many condominium
owners consortiums existing in the City of Buenos Aires and EDESUR
users. This would imply an important reduction of the values to be
invoiced in future to these consortiums, as well as the obligation for
retrospective reimbursement of “unduly” received amounts.
Process status: Evidence stage. The accounting expert evidence stage
ended. Its transfer was ordered.
Compañía de Electricidade do Rio de Janeiro S.A.
Plaintiff
: Meridional S/A Servicios, Emprendimientos
Defendant
Court
y Participaciones.
Compañía de Electricidade do Rio de Janeiro S.A.
:
: 9ª Vara de Hacienda Pública de Río de
Case/Identification : 98.001.048296-8
Janeiro
Summary of proceedings: Mistral and Civel, represented by
Meridional, filed disputes to be creditors of the old power distribution
state company CELF on the grounds of works contracts entered into
with the said company. In its representation, Meridional demands
payment of certain collectable invoices and contract fines due to
the above mentioned work contracts termination for an amount of
R$136,085,827.20.
Process status: The procedure had been suspended until appeals
against other actions of the same nature filed by CIVEL AND MISTRAL
against CELF are solved (discussion on the contract anticipated
termination validity), which were won by CELF. These actions are
not included herein because the Compañía de Electricidade do Rio
de Janeiro S.A. is not part of them. This was due to the fact that the
Court considers it necessary to examine the effect the final decision
on the said actions may have on the case we are facing.
Amount: US$106,808,116.73.
Plaintiff
:
Defendant
Court
Case/Identification :
766
Cibrapel S/A Industria de Papel y
Embalajes.
Compañía de Electricidade do Rio de Janeiro S.A.
:
: Vara Única de Guapimirim
Amount: Undeterminable
Plaintiff
Defendant
Court
Edesur S.A.
:
:
Secretaría de Energía de la Nación.
: N° 3 Federal Administrative First Instance
Summary of proceedings: 1) To sentence Compañía de Electricidade
do Rio de Janeiro S.A. to indemnify for material and moral losses
resulting form the poor quality of the services provided by Compañía
de Electricidade do Rio de Janeiro S.A. between 1991 and 1998. 2)
To sentence the Compañía de Electricidade do Rio de Janeiro S.A.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
176
to reimburse the amounts paid due to a rate increase based on
administrative resolutions (portarías) 38 and 45 of 1986, which are
considered illegal by the Government and the Courts.
Process status: Compañía de Electricidade do Rio de Janeiro S.A.
protested and, as an expert’s appraisal is necessary to verify the
alleged indemnities due to power blackouts, the expert’s appraisal
production stage was started.
Amount: US$18.206.065, 95.
Plaintiff
: ABRACON - Associação Brasileira do
Defendant
Court
Case/Identification :
Consumidor.
Compañía de Electricidade do Rio de Janeiro S.A.
:
: 4ª Vara Civil de São Gonçalo/RJ
2000.004.012307-7
Summary of proceedings: Contesting of the constitutionality of the
“public lighting rate” (TIP), charged by Compañía de Electricidade
do Rio de Janeiro S.A. in its invoices. Compañía de Electricidade do
Rio de Janeiro S.A. argues that it is just a collector of the rate, lacking
passive legitimacy.
Process status: The ruling declared the Compañía de Electricidade
do Rio de Janeiro S.A. passive illegitimacy and accepted the defense
preliminarily. Due to this sentence, on 5/28/04 the Attorney’s
General Office filed an appeal and we are waiting for the date the
trial will take place.
Amount: US$7,089,062.82.
Plaintiff
: Núcleo de Defesa do Consumidor-
Defendant
:
NUDECON.
Compañía de Electricidade do Rio de
Janeiro S.A. y LIGHT.
Court
Case/Identification :
1999.001.168990-1.
: 8ª Vara Empresarial do Rio de Janeiro.
Summary of proceedings: 1) The tax immunity declaration of
Compañía de Electricidade do Rio de Janeiro S.A. regarding the
tax called COFINS; and 2) The Unión Federal sentence to reimburse
payments for COFINS during the last five years, corrected and
increased with the legal charges based on the decision processed in
Court and contained in Security Order N° 92.0113589-4.
Amount: U$10,730,000.
Plaintiff
Defendant
Court
Case/Identification : Annulment Action N° 97.02.09655-3.
Compañía de Electricidade do Rio de Janeiro S.A.
TRF First Section
: Unión Federal
:
:
Summary of proceedings: The Unión Federal filed an annulment
action against Compañía de Electricidade do Rio de Janeiro S.A.
to the Second Region TRF with the purpose of annulling the ruling
(Security Order Nº 92.0113489-4) that recognized its tax immunity
regarding the COFINS withholding.
Process status: On 02/19/2003, members of the TRF – 2nd Region
special agency unanimously rejected the appeal of Unión Federal/
Hacienda Nacional, a ruling that was appealed against. This last
appeal is pending.
Amount: US$121,496,000.
Compañía de Electricidade do Rio de Janeiro S.A.
Plaintiff
Defendant
Court
Case/Identification : Ordinary Action 96.0035652-1.
:
: Unión Federal
:
2ª Vara Federal de Niterói.
Summary of proceedings : Compañía de Electricidade do Rio de
Janeiro S.A. wants tax immunity to be declared regarding its collection
of tax called PIS, and Unión be sentenced to reimburse the total
amounts collected during the last five years, starting from August,
1996, based on § 3 of article 155 of the Federal Constitution.
Summary of proceedings: Collective civil lawsuit filed on December 13,
1999, with the purpose of preventing suspension of power supply to
consumers in arrears, as well as to consumers in irregular situations
(stealing of power.)
Process status: Sentence unfavorable to Compañía de Electricidade
do Rio de Janeiro S.A. in first instance. Appeal to the Federal Regional
Court pending.
Amount: Undeterminable.
Amount: U$21,806,000.
Compañía de Electricidade do Rio de Janeiro S.A.
Plaintiff
Defendant
Court
Case/Identification : Ordinary Action 96.0035653-0
:
: Unión Federal
:
2ª Vara Federal
Plaintiff
Defendant
Court
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
Compañía de Electricidade do Rio de Janeiro S.A.
:
: Unión Federal
:
2ª Vara Federal de Niterói.
Case/Identification : Preventative Action 96.0034797-2
Summary of proceedings : Preventative action in lawsuit by Compañía
de Electricidade do Rio de Janeiro S.A. based on § 3 of article 155 of
the Federal Constitution with the purpose of suspending the tax credit
suit regarding the tax called PIS which is deposited under regulation
periodically.
Process status: The sentence was not appealed against by the
defendant. Therefore, the authorization to continue with the legal
deposits was maintained. Taking into consideration the lawsuit
procedures from the petition, the possibility of swing the ruling for
provisional execution and the list of legally deposited values is being
studied.
Amount: U$21,806,000.
Plaintiff
Defendant
Court
:
: Unión Federal
:
Compañía de Electricidade do Rio de Janeiro S.A.
4a Vara Federal de Niterói y 2ª Vara Federal
de Niteroi
Case/Identification : Ordinary Action 96.0035652-1 and Ordinary
Action 96.0035387-5.
Summary of proceedings: Compañía de Electricidade do Rio de
Janeiro S.A. wants to obtain the declaration of non-existence of a
legal-tax relation (tax immunity) regarding payment of the tax called
FINSOCIAL and affecting its gross monthly income. Also, the company
wants the Unión to be sentenced to fully reimburse the amounts
collected during the last five years, from October 1996 and, therefore,
the Unión to be sentenced to pay the difference between the payment
value according to Laws 7,787/89, 7,894/89, and 8,147/90, and the
amount owed according to Decree-Law 1,940/82, during the above
mentioned period.
Process status: The Compañía de Electricidade do Rio de Janeiro
S.A. and Unión Federal filed and appeal against the first instance
sentence. Court records were sent to the Federal Regional Court.
Hearing before the said Court is pending.
Amount: U$7,269,000.
Compañía de Electricidade do Rio de Janeiro S.A.
Plaintiff
Defendant
Court
:
: Unión Federal
:
3rd Group – Federal Regional Court of the
2nd Region and 2ª Vara Federal de Niteroi
Case/Identification : Ordinary Action 96.0035652-1 and Appeal
against Security Order 2000.02.01.055412-5
177
application of the 30% taxable profit limit imposed by the Unión
Federal for the calculation of the IRPJ base and the CSLL negative
calculation bases recorded until 12/31/1994 (excluding 1993.)
Process status: First instance sentence fully favorable to the Compañía
de Electricidade do Rio de Janeiro S.A. interests. Hearing of the appeal
filed by the Unión Federal to the Federal Regional Court pending
since 08/07/01.
Amount: Undeterminable.
Compañía de Electricidade do Rio de Janeiro S.A.
Plaintiff
Defendant
Court
:
: Unión Federal
:
5th Group – Federal Regional Court of the
2nd Region and 2ª Vara Federal de Niterói.
Case/Identification : Ordinary Action 96.0035652-1 Appeal
against Security Order 1998.51.02.207129-6
Summary of proceedings: It is the same as the previous lawsuit, but
for fiscal years are 1993, 1995, and 1996, with profit generated in
1998 and after.
Process status: First instance sentence fully favorable to the Compañía
de Electricidade do Rio de Janeiro S.A. interests. Hearing of the
appeal to the Federal Regional Court of the 2nd Region pending
since 10/07/03.
Amount: Undeterminable.
Compañía de Electricidade do Rio de Janeiro S.A.
:
: Unión Federal
:
Plaintiff
Defendant
Court
Case/Identification : Ordinary Action 96.0035652-1 Lawsuit
98.0207203-6
2ª Vara Federal de Niteroi
Summary of proceedings: This is a preventative constitutional
action (“Mandado de Segurança”) with the purpose of ensuring the
company the right to immediately and fully deduct the 1990 balance
sheet indexing difference effects over devaluation, depreciation, and
disposal of fixed assets for determining the calculation base for the
Social Contribution over Profits – CSL. (Law 7,689/88) on the 1988
and following calendar years.
Process status: On 05/19/1998 sentence was pronounced only
partially accepting the Compañía de Electricidade do Rio de Janeiro
S.A. allegations. We are waiting for the publication of the ruling
rejecting an appeal for reconsideration. After this it is possible to
resort to higher courts.
Summary of proceedings: This is a preventative constitutional
action (“Mandado de Segurança Preventivo”) aimed to prevent the
Amount: U$20,000,000.
Plaintiff
:
Compañía de Electricidade do Rio de Janeiro S.A.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
178
Defendant
:
INSS – Instituto Nacional de Seguridad
Social and FNDE – Fondo Nacional de
Desarrollo de la Educación.
: 8ª Vara Federal de Niterói.
Lawsuit 2000.51.01.011750-5.
Court
Case/Identification :
Summary of proceedings: Declaration of unconstitutionality of values
collected as education wages by the Instituto Nacional de Seguridad
Social and the Fondo Nacional de Desarrollo de la Educación during
the May 1977 to April 1988 period is requested, and the resulting
recognition of the Compañía de Electricidade do Rio de Janeiro S.A.
right to credit the said values with contributions about to expire and
collected by the INSS for future compensations. The said payment
is said to be a tax in nature and a violation of tax legality and
compliance.
Process status: Sentence partially accepted; appeals were filed to the
Federal Regional Court of the 2nd Region; their solution is pending.
Amount: U$15,356,150.
Plaintiff
Defendant
:
:
Compañía de Electricidade do Rio de Janeiro S.A.
Fondo Nacional del Desarrollo de la
Educación – FNDE, Instituto Nacional del
Seguro Social – INSS and State of Río de
Janeiro
Court
Case/Identification :
: Vara Federal de Niterói.
Lawsuit 98.0203718-4
Summary of proceedings: This is a action with the purpose of
declaring unconstitutional the contribution called “Salario Educación”
this obtaining the reimbursement of values collected by the defendant
between 07/14/88 and 05/04/98.
Process status: The tutelary action was not accepted and an appeal
“Agravo de Instrumento” was filed (interlocutory sentence appeal.)
The appeal has been pending in the Federal Regional Court since
/05/24/02.
Amount: U$11,685,150.
Plaintiff
Defendant
Court
:
:
:
Case/Identification :
Compañía de Electricidade do Rio de Janeiro S.A.
Superintendente Estadual de Fiscalización de
la Secretaría de Estado de Hacienda and
Inspector de la Inspectoría de Fiscalización
Estadual – Contribuyentes de Grande Porte
11ª Vara de Hacienda Pública of the Rio de
Janeiro State
Lawsuit 1999.200.013.062-7 (2946/1)
Summary of proceedings: This is a preventative constitutional action
(“mandado de segurança preventivo”) aimed to prevent the limitation
imposed by article 2 of Law 3,188/99 that restricted the right to use
the credit resulting from the tax called ICMS in connection with the
purchase of fixed assets goods.
Process status: On 12/14/1999 sentence was pronounced and the
petition was accepted to declare the possibility for Compañía de
Electricidade do Rio de Janeiro S.A. to fully use credits resulting from
the ICMS for the purchase of fixed assets. Currently, the petition
“Agravo de Instrumento” filed by the Rio de Janeiro State to the
Federal Supreme Court is pending.
Amount: U$14,805,300.
:
Plaintiff
:
Defendant
:
Court
Case/Identification :
Secretaría de la Receta Federal.
Compañía de Electricidade do Rio de Janeiro S.A.
Taxpayers Council of the Ministry of Finance.
Infringement Procedure 0710200/00370/02
and Administrative Lawsuit
10730.002730/2003-13.
Summary of proceedings: Tax infringement for a supposedly unpaid
difference corresponding to tax called COFINS. During the mandatory
verification procedures, differences between the declared values, the
registered values, and the collected values and those paid in connection
with COFINS were verified for the 12/2001 to 06/2002 period.
Process status: On 08/11/2003, Compañía de Electricidade do Rio de
Janeiro S.A. filed its contest to the Infringement procedure, which was
accepted by the Comisaría de la Receta Federal de Juzgamiento de
Niterói/RJ. Currently, the procedures are at the Comisario de la Receta
Federal de Niterói/RJ waiting to be sent to the Taxpayers Council of
the Ministry of Finance for the Voluntary Appeal ruling.
Amount: US$32,870,000.
Plaintiff
:
Defendant
Court
Case/Identification :
Engineers Union of the Rio de Janeiro State
in representation of 133 employees
Compañía de Electricidade do Rio de Janeiro S.A.
:
: Vara do Trabajo de Niterói
Enforcement Action 628/1993
Summary of proceedings: In Collective Agreements 263/84 and
282/85, effective from November 1984 to October 1985, and from
October 1985 to November 1986, respectively, wage adjustment, 4%
productivity payment, and 4% semi-annual readjustment clauses
were established. These are financial clauses that determine a salary
adjustment for engineers in a percentage determined in the collective
agreements, in addition to a productivity bonus, and semi-annual
salary readjustment.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
Process status: It is at credit settlement stage against Compañía de
Electricidade do Rio de Janeiro S.A. Waiting for the ruling on the appeal
for reconsideration filed by Compañía de Electricidade do Rio de Janeiro
S.A. against the temporary settlement before the Brasilia Labor Court.
Amount: US$11,262,798.63.
:
Plaintiff
:
Defendant
:
Court
Case/Identification :
Secretaría de la Receta Federal.
Compañía de Electricidade do Rio de Janeiro S.A.
Taxpayers Board of the Ministry of Finance.
Infringement Action 0710200/00370/02
and Administrative Lawsuit
10730.002674/2003-17.
Summary of proceedings: Tax infringement due to supposedly unpaid
difference of tax called IRPJ. The Infringement Action results from the
improper compensation of fiscal losses, taking into consideration that
the 30% compensation limit, adjusted by additions and exclusions
provided and authorized by the income tax legislation on net profits
was not observed. On the contrary, the company compensated the
total of its real profit under Security Order 98.0207129-3, under
procedure at the 1st Vara Federal of the Rio de Janeiro Judicial Section
in Niterói.
Process status : On 08/08/2003, the Compañía de Electricidade
do Rio de Janeiro S.A. filed an appeal against the Infringement
Action that was partially accepted, to maintain the fiscal lawsuit in
the remaining value of R$18,265,719.04, in addition to the arrears
charges. Because of this, on 07/27/2004, Compañía de Electricidade
do Rio de Janeiro S.A. filed a petition requesting to register in the
Secretaría de la Receta Federal information systems the suspension
of the IRPJ remaining balance demand, on the grounds of the ruling
contained in the Security Order 98.0207129-3. However, the lawsuit
proceedings are currently at the First Taxpayers Board of the Ministry
of Finance waiting for the ruling on the Official Appeal filed by the
Receta Federal.
Amount: US$6,750,000.
Plaintiff
Defendant
Court
Case/Identification
:
:
:
:
Secretaría de la Receta Federal.
Compañía de Electricidade
do Rio de Janeiro S.A.
Comisaría de la Receta Federal
de Juzgamiento.
Infringement Action 00218 and
Administrative Lawsuit
10730.002007/99-24.
179
Process status: On 06/07/1999, Compañía de Electricidade do Rio
de Janeiro S.A. filed its contest of the Infringement Action, which
was accepted by the Comisaría de la Receta Federal de Juzgamiento.
On these grounds, Compañía de Electricidade do Rio de Janeiro S.A.
filed a Voluntary Appeal partially accepted by the 3rd Cámara of the
2nd Taxpayers Board of the Ministry of Finance, to exclude from the
calculation out the debit corresponding to the interest on the payment
delay and unduly included in the R$4,305,641.37 value. Currently, the
lawsuit proceedings are at the fiscal control and supervision service
of the Comisaría de la Receta Federal en Niterói/RJ.
Amount: US$6,800,000.
:
Plaintiff
:
Defendant
Court
:
Case/Identification :
Selma de Souza and other 122 complainants.
Compañía de Electricidade do Rio de Janeiro S.A.
Segunda Vara del Trabajo de Niterói.
Labor Demand 3142/1995.
Summary of proceedings: The complainants, discharged from
the company, want to be reinstated and be applied a stability
guarantee.
Process status: Waiting for the ruling on the appeal filed by Compañía
de Electricidade do Rio de Janeiro S.A. to the Brasilia Labor Court.
Amount: US$21,501,706.48.
Coelce S.A.
:
Plaintiff
:
Defendant
Court
:
Case/Identification :
Inácio Nunes Arruda & Others.
Coelce.
2a Vara da Fazenda Pública – Ceará
2002.02.38915-4
Summary of proceedings: People’s action for the annulment of the
Coelce sale process.
Process status: The process has been suspended for more than a
year, and it may be soon dismissed.
Amount: Undeterminable.
Codensa S.A.
Plaintiff
Defendant
: Henry Patiño and Others.
:
Codensa, Bogotá Capital District and
Empresa de Energía de Bogotá S.A. ESP (EEB)
Cundinamarca Administrative Court, Third
Section – Sub-section “B”.
Case file 03-0680.
Summary of proceedings: Tax infringement due to possible unpaid
difference on tax called CSL.
Court
:
Case/Identification :
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
180
Summary of proceedings: The plaintiffs want: i) Termination of the
agreement because it was entered into without compliance with the
legal requirements, as the Capital District did not select the contractor
through a public bidding; ii) The rate established by Codensa and
the Capital District in January, 2002, is illegal and excessive; iii) The
payment agreement on debts corresponding to 1998, 1999, and 2000,
entered into in 2002, were at an illegal and harmful rate; iv) Amounts
collected from 1998 to today are to be re-invoiced deducting the
overcharge, which CODENSA should reimburse to the Capital District;
and v) Payment of 15% incentive to the plaintiff (US$4 million) and
from 10 to 159 person’s minimum wages (US$20,000).
Process status: Evidence stage.
Amount: US$25,000,000.
Plaintiff
: Users of the public lighting service in La
Defendant
Court
:
:
Case/Identification :
Calera Municipality.
Codensa and La Calera Municipality.
Cundinamarca Administrative Court, Second
Section – Sub-section “A”.
Case file 02-1012.
Summary of proceedings: Codensa provides public lighting service
to La Calera Municipality and another 90 municipalities in the
Cundinamarca Province. With some of them, there is no written
contract or authorization from the corresponding agency (Municipal
Council and Mayor). The plaintiffs argue that there is no written
contract for the service provision and, therefore, they demand
reimbursement of the amounts collected. They also argue that the
service to rural areas is invoiced although these areas have no public
lighting.
Process status: Evidence stage.
Amount: Undeterminable.
Process status: Ruling is pending in the administrative proceeding
under the lack of exhaustion exception filed by the Fiscal Court.
Amount: US$60,623,123.
Endesa S.A. (Parent company)
Plaintiff
Defendant
Court
Case/Identification : 4061-2002
:
:
:
Sociedad Punta de Lobos S.A.
Endesa, Celta and the Treasury of Chile
30th Civil Court of Santiago
Summary of proceedings: The plaintiff demands absolute annulment
of assignment and transfer of any other legal transaction by Endesa
to Celta regarding real estate forming the maritime lease granted to
Endesa in the Punta Patache area, First Region, and its declaration
of expiration by the Court.
Process status: The parties were summoned for the sentence.
Amount: Undeterminable.
Plaintiff
Defendant
:
:
:
Court
Case/Identification :
Sociedad Punta de Lobos S.A.
Endesa, Celta and Puerto Patache S.A. Sea
Terminal
Eight Civil Court of Santiago
129-2003
Summary of proceedings: The plaintiff requested the defendants
mandatory fulfillment of the so-called “Bidding Contract” called by
Celta and in which the latter, Endesa, Patache S.A. Sea Terminal,
and Punta de Lobos S.A. participated. The plaintiff argues that the
contract was not fulfilled.
Process status: The sentence rejected the demand. Appeal filed by the
plaintiff is pending at the Santiago Court of Appeal. The preventive
action prohibiting actions or contracts on Puerto Patache is effective.
Amount: Undeterminable.
Edelnor S.A.
Plaintiff
Defendant
Court
:
:
:
Case/Identification :
Edelnor S.A.A.
Superintendencia Nacional de
Administración Tributaria -SUNAT-.
First Court Specialized in Administrative
Procedures
Case file: 426-2004
Plaintiff
Defendant
:
:
Court
:
Case/Identification :
Sociedad Punta de Lobos S.A.
Treasury of Chile (ENDESA is third party
involved)
21st Civil Court of Santiago
553-2003
Summary of proceedings: Legal procedure requesting partial
annulment of Resolution 00100-5-2004 and recognition of the
legality of the assets re-evaluation operation carried out by the
company in accordance with Law 26283.
Summary of proceedings: The plaintiff demanded annulment of Supreme
Decree 139 of 2002, issued by the Ministry of Defense, Navy Department,
on the grounds that the said Decree was issued in contradiction to the legal
provisions regarding its issuance. According to this Decree, the expansion
of the Endesa maritime lease was extended for the loading of salt through
Puerto Patache, in the First Region.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
Process status: The evidence term has expired, and the parties are
waiting to be summoned for sentence. Regarding the preventive
actions suspending any application of Supreme Decree 139 of 2002,
of the Navy Department, ruling on the appeal against the resolution
that prevented its annualment is pending.
Summary of proceedings: The plaintiff demanded the defendants
be ordered to mandatorily fulfill of the so-called “Bidding Contract”
called by Celta and in which the latter, Endesa, Patache S.A. Sea
terminal, and Punta de Lobos S.A. participated. According to the
plaintiff, the contract was not fulfilled.
181
Amount: Undeterminable.
Plaintiff
Defendant
Court
:
: Maria Elena Teresa Sola Ruedi
:
Endesa, Minister of Economy, and
Superintendent of Electricity and Fuels.
Santa Barbara Court of First Instance
Process status: Sentence rejected the demand. Jurisdiction on the
appeal filed by the plaintiff to the Santiago Court of Appeal pending.
The preventive action prohibiting entering into actions or contracts
on Puerto Patache continues in effect.
Amount: Undeterminable.
Summary of proceedings: The demand is to change the easement
regime for expropriation, and payment for a larger flooded surface.
Regarding subsidy, re-assessment of the indemnity amount paid for
the easement is demanded.
Amount: Undeterminable.
Process status: Summons took place, and the plaintiffs – Endesa
and the Treasury- alleged the Court to be incompetent. The Court
ordered suspension of the proceedings and accepted the incident on
trial. The Treasury filed petitions and was granted appeal regarding
the refund. To this date, deducted incidents are pending for ruling.
Plaintiff
Defendant
Court
Case/Identification : 4061-2002
:
:
:
Sociedad Punta de Lobos S.A.
Endesa, Celta and the Treasury of Chile
30th Civil Court of Santiago
Summary of proceedings: The plaintiff demands absolute annulment
of assignment and transfer of any other legal transaction by Endesa
to Celta regarding real estate forming the maritime lease granted to
Endesa in the Punta Patache area, First Region, and its declaration
of expiration by the Court.
Process status: The parties were summoned for sentence.
Amount: Undeterminable.
Amount: Undeterminable.
Pangue S.A.
:
Plaintiff
:
Defendant
Court
:
Case/Identification :
Empresa Eléctrica Pangue S.A.
Chilectra S.A.
18th Civil Court of Santiago
3886-99
Plaintiff
Defendant
Court
Celta
Empresa Constructora Belfi S.A.
:
:
: Arbitration Court (Raúl Varela Morgan)
Summary of proceedings: The legal action resulted from differences
regarding construction of the Puerto Patache dock, whose concrete
is contaminated with chloride.
Summary of proceedings: The action demands annulment of the
obligation to pay compensation to regulated price users resulting
from Power Rationing Decree 287 from the Ministry of Economy.
Process status: Summons took place, and proceedings were lodged.
The petition has not been filed yet.
Process status: Ruling is about to be pronounced on this case.
Amount: Undeterminable.
Amount: Undeterminable.
Compañía Eléctrica de Tarapacá S.A.
Plaintiff
Defendant
:
:
Court
:
Case/Identification :
Sociedad Punta de Lobos S.A.
Endesa, Celta, Minera Puerto Patache S.A.
Sea Terminal
Eighth Civil Court of Santiago
129-2003
Plaintiff
Defendant
Court
Celta
Foster Weehler
:
:
: Arbitration Court (Vasco Costa)
Summary of proceedings: The legal action resulted from differences
regarding construction of the Tarapacá Plant powerhouse, whose
concrete is contaminated with chloride.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
182
Process status: Arbitrator Vasco Costa Ramirez was assigned,
notification of his appointment is still pending.
before the National Supreme Court of Justice and it includes an initial
amount of approximately ThCh$294,469.
Amount: Undeterminable.
Hidroeléctrica El Chocón S.A.
Administración Federal de Ingresos Públicos - Dirección General
Impositiva
On December 28, 2000, the AFIP - DGI claimed under Corporation
Resolution 166/00 (which officially assessed an amount of
ThCh$328,256 on income tax corresponding to withholdings on
beneficiaries abroad) that the Corporation omitted withholding
income tax on certain payments made abroad in order to obtain a
bank loan during fiscal year 1994. Also, it ruled that the Corporation
must pay ThCh$745,797 as compensation interests calculated to
December 20, 2000. The Corporation did not withhold the said
amounts considering them income from a foreign source not
subject to taxation by the beneficiaries. The Corporation filed its
corresponding answer to the charges and rejected the tax adjustment
carried out. Finally, the AFIP - DGI decided to apply the Corporation
a ThCh$229,779 fine on possible infringement of article 45 of Law
11,683. On February 20, 2001, the Corporation filed an appeal to
the National Fiscal Court.
On December 28, 2000, the Corporation was notified under
Resolution 204/00 that officially been assessed the taxes and charges
payables on added value tax for the December 1993 to July 1995
period, that it was to compensate the amounts to be recorded with
credit amounts and pay ThCh$148,533 on compensation interest to
December 11, 2000. Also, it was ruled to apply to the Corporation
a ThCh$195,907 fine on the possible infringement of article 45 of
Law 11,683. The AFIP-DGI considers inappropriate Corporation’s
determination of when taxability occurred, as it considers provisions
in article 18 of the Value Added Tax Law rules and regulations decree
applicable. The Corporation rejected the AFIP-DGI intention to apply
article 18 of the Value Added Tax Law rules and regulations decree
to the taxable facts perfected before the rules and regulations
publication date in the Official Gazette. It was alleged that the said
regulation is unconstitutional as well as application of decree 493/95
which pertained to the interests and fines on expired obligations or
infringements, or committed before July 31, 1995. On February 20,
2001, the Corporation filed an appeal to the National Fiscal Court.
Royalties
On June 26, 2000, the Corporation was notified of a legal action
regarding the collection of interest on royalties supposedly paid out
of term. The legal action was started in the Province of Neuquén
In addition, on September 27, 2000, the Corporation was notified of
a new legal action in the Province of Neuquén against the National
State and the hydro-electric plants of Comahue in order to collect
royalties on the funds accumulated in the Sales Account. The said
legal action does not state amount or date from which the claimed
amounts are owed, but the action tries to collect 12% of the funds it
understands each generator has contributed to the said account.
Dirección Provincial de Rentas of the Buenos Aires Province
On September 10, 2001, the Corporation received from the Dirección
Provincial de Rentas of the Buenos Aires Province notification on
the start of an official assessment for ThCh$324,071 (the amount
does not include interests or fines), as taxation on the gross income
corresponding to fiscal years from February 1995 to December 1998.
The differences claimed result from: a) non-registration of the tax
in the Buenos Aires Province between February 1995 and June 1996
regarding the contracts entered into by the Corporation, and b)
application of a rate lower than the applicable one. On October
25, 2001, the Corporation entered a ThCh$120,192 debt in the easy
payment terms regime provided by Law 12,727. On December 28,
2001, the Dirección Provincial de Rentas notified the Corporation
on Resolution 655/01 that (i) determined that the Corporation paid
by default the amount of ThCh$184,045 corresponding to the tax
on gross income for the fiscal years from February to December
1995, January to December 1996, January to December 1998; and
(ii) applied a fine of ten percent of the supposedly unpaid amount
to the Corporation. On January 22, 2002, the Corporation filed an
appeal reporting that the amount included in the easy payment terms
regime had not been considered, and the reasons for which the rate
indicated by the Dirección Provincial de Rentas is not applicable.
Hidroinvest S.A.
On December 27, 2000, the AFIP-DGI notified Hidroinvest S.A.
on Resolution 519/00 that officially determined the amount of
ThCh$729,283 as income tax for the 1993 fiscal year that Hidroinvest
S.A. supposedly should have paid on the difference between the
purchase and transfer values of the bonds handed over to the
National State on the benefits obtained from the said operation,
considering that a debt was paid for an amount larger than the bonds
purchase value and ThCh$1,568,687 corresponding to compensation
interest. Also, the AFIP-DGI applied Hidroinvest S.A. a ThCh$510,498
fine on an alleged infringement of article 45 of Law 11,683. The
agency considered that Hidroinvest S.A. should have paid the tax
on the difference between the acquisition and transfer values of
the bonds handed to the National State and corresponding to the
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
183
benefits obtained from the operation, considering that a debt for
an amount larger than the bonds purchase cost was paid. The
Corporation appealed against the resolution of the National Fiscal
Court. Sentence was pronounced on May 26, 2004, confirming the
Resolution regarding the tax and its interests and annulling the fine
applied. In the fist case, Hidroinvest S.A. was sentenced to pay the
legal costs. The company and the Treasury appealed against the
sentence.
This sentence was appealed against to the Federal Administrative
National Chamber of Appeal.
With the purpose of preventing the start of the fiscal execution of
the supposed credit determined by the AFIP-DGI and confirmed by
the National Fiscal Court, on July 30, 2004, the Corporation paid the
amount of ThCh$729,283 fine and ThCh$2,552,286 on interests,
expressly putting on record that it did not agree with the payment
resulting from the petition for reconsideration and limited appeal
filed against the sentence of the National Fiscal Court.
On October 15, 2004, professional fees of the legal representative and
the National Treasury attorney were established at ThCh$75,833 and
ThCh$252,777, respectively, for their work during the processing of the
case file before the National Fiscal Court. On November 2, 2004, an
appeal was filed against the regulations, for overcharging. However,
it is necessary to highlight that in the petition for reconsideration
and limited appeal filed against the National Fiscal Court sentence,
an appeal was filed against the payment of legal costs applied
to Hidroinvest S.A. in connection with the tax adjustment. For
this reason, if the petition is accepted in this point, the regulated
professional fees should not be paid by the Corporation.
On November 30, 2004, petitions of appeal filed by both parties
against the professional fees regulation were granted. The resolution
was notified to the parties; therefore, it only remains for the case file
to be sent to the Federal Administrative National Chamber of Appeal
for consideration of the petitions of appeal.
Central Costanera S.A.
On July 25, 1990, the Italian Government authorized Medio Credito
Centrale to grant the Government of the Republic of Argentina a
financial credit of up to US$93,995,562 to finance the purchase of
goods and services of Italian origin and used in the restoration of
four groups in the steam-electric power plant property of Servicios
Eléctricos del Gran Buenos Aires (“SEGBA”). The said credit financed
the purchase of goods and services included in Work Order 4322 (the
“Order,”) issued by SEGBA to a trust headed by Ansaldo S.p.A. of Italy.
According to the terms in the “Agreement on Work Order 4322”: (i)
SEGBA mandated Central Costanera S.A. to manage the execution
of the services in the Order and executed the work and services
that according to the Order corresponded to SEGBA; and (ii) Central
Costanera S.A. undertook to pay the National Energy Department
(the “Energy Department”) the capital share and interests resulting
from the credit granted by Medio Credito Centrale, at a 1.75% annual
rate (the “Agreement.”) As a guarantee of fulfillment of the economic
obligations undertaken by Central Costanera S.A., the buyers -holder
of class “A” shares of Central Costanera S.A.- established a pledge on
the total of class “A” shares of their property. If the agreement is not
fulfilled and the guarantee is executed, the Energy Department may
immediately proceed with the sale of the shares in guarantee through
a public bidding, and exercise the political rights corresponding to
the pledged shares.
Through the application of Law 25,561, Decree 214/02, and its rules
and regulations, Central Costanera S.A. payment obligation resulting
from the Agreement has been “pesified” to the exchange rate of
one peso equal to an American dollar, in addition to the reference
stabilization factor (“CER,”) and maintaining the obligation original
interest rate. On January 10, 2003, the National Executive Branch
issued Decree 53/03 that modified Decree 410/02, incorporating
section j) to its article one. Through this regulation, “pesification”
is excluded from the obligation applied to provincial states,
municipalities, and companies from the public and private sector
of providing amounts of money in foreign currency to the National
Government when the amounts result from subsidiary or other
nature loans and guarantees originally financed by multilateral credit
agencies or originated in liabilities assumed by the National Treasury
and refinanced with foreign creditors.
Central Costanera S.A. considers that the loan resulting from the
Agreement does not fit in any of the provisions in Decree 53/03 and,
if it did, there are solid reasons that determine that Decree 53/03 is
unconstitutional because it openly violates the principle of equality
and the property right established in the National Constitution. If the
said provisions were complied with, the contingency would imply,
to December 31, 2004, decrease of the period net profits of around
US$8 million, and an indebtedness increase of around US$20 million.
To this date, the Energy Department has not claimed against the
“pesified” payments from Central Costanera S.A.
To December 31, 2004, the Central Costanera S.A. debt regarding the
Agreement and including the interest earned reaches US$20,656,020,
while at December 31, 2003, it was US$22,593,478.
Edegel S.A.
• Edegel / Sunat
As a result of the auditing of tax obligations compliance on income
tax during the 1995 to 1999 fiscal years, on December 7, 2001,
Edegel was notified by SUNAT on resolutions of assessment and
fine for MUS$90,290.17. The main objection referred to real estate,
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
184
machinery, and equipment devaluation provision for every audited
period.
virtually matches the amounts provided in the expert’s appraisal
that supported the revaluation carried out due to the use of Law
26283 regime.
The observation “Fiscal Year Provisions, Real Estate, Machinery, and
Equipment Devaluation” corresponding to the 1999 fiscal year meant,
in management’s opinion, a violation of the Tax Stability Agreement
entered into with the Supreme Government, because SUNAT founds
its observation on the Seventh Temporary and Final Provision of
Law 27034, which modified the income tax general regime, under
the said Agreement. On mutual agreement, the parties submitted
the differences to the decision of an arbitration court. On April 22,
2002, the said court ruled declaring Edegel legal action unfounded
and the Seventh Temporary and Final provision of Law 27034 non-
applicable.
Before the arbitral award, on March 19, 2002, through Administration
Resolution 015-4-14948, the Administration declared the demand
filed by Edegel against the assessment and fine resolutions partially
founded, and maintained the most significant observations. This
resolution was appealed by Edegel to the Fiscal Court on April 10,
2002.
On November 20, 2002, the Fiscal Court issued Resolution 06619-
4-2002, stating that the arbitral award must be respected and,
accordingly, the Seventh Temporary and Final Provision of Law 27034
is not applicable to Edegel while its Tax Stability Agreement is in
effect. However, the Fiscal Court also declared that Administration
Resolution 015-4-14948 is invalid because the administrative
procedure was not suspended in the first instance while the arbitration
was being solved, and ordered the return of the case file to the Sunat
for solution, taking into consideration the arbitral award, and for
the ruling taking into consideration the applicable interpretation
methods and, if necessary, qualified taxable facts in accordance with
Regulation III of the Tax Code Single Text Preliminary Title.
On July 10, 2003, Edegel was notified through Administration
Resolution 0150150000032, according to which the Tax
Administration concluded that tax benefits regulated by Law 26283
and its rules and regulations are not applicable to the company as
no real separation occurred in 1996. Also, validity of the assessment
that sustained the market value attributed as accounting cost of the
goods purchased during the separation process was questioned,
because the methodology established in the General Assessment
Rules and Regulations was not applied.
On August 1, 2004, Edegel filed a petition of appeal against the said
Administration Resolution 0150150000032, attaching a series of
evidence that included an assessment prepared, on its request, by
the Technical Assessment Agency of Peru, which established that to
November 28, 1995, the values of the fixed assets goods transferred
due to the company reorganization reached a total amount of
US$868,381,396.00, which, in terms of assessment engineering,
On the other hand, on November 14, 2003, Edegel filed a written
document partially giving up the appeal filed against Administration
Resolution 0150150000032, and through which it accepts the validity
of a series of observations made by SUNAT (paying the omitted tax
and its corresponding interests) and maintains its contents regarding
the three more significant observations, such as: (i) observation on
excessive devaluation as the result of ignorance of use of Law 26283
due to application of Regulation VIII of the Tax Code Preliminary Title
and to an alleged invalidity of the assessment; (ii) the observation
on the difference regarding liabilities exchange in foreign currency
corresponding to fixed assets of 1998 and 1999 fiscal years; and (iii)
the observation on the intangible depreciation and provisions for
doubtful collection accounts.
On September 10, 2004, through resolution 06686-4-2004, the
Fiscal Court ruled the partial discontinuance of the appeal filed
by EDEGEL on November 14, 2003, with the purpose of taking
advantage of the SEAP. Also, the Fiscal Court ruled that application
of Regulation VIII of the Tax Code lacks validity, for which the Tax
Administration concluded that the split of Talleres Moyopampa was
not effective and disregarded the assets transfer carried out within its
framework. Regarding assets revaluation with tax purposes carried
out by the company, the Tax Administration will have to determine
the assets’ book cost and, if the Administration considers that this
amount exceeds the market value, the corresponding adjustment
will be carried out. On the other hand, the observation regarding the
exchange difference for liabilities in foreign currency corresponding
to fixed assets of the 1998 and 1999 fiscal years, and the observation
on intangible depreciation and provisions for doubtful collection
accounts was confirmed.
• Note on General Sales Tax for the 2000 Period
On December 27, 2004, Edegel was notified the assessment and fine
resolutions for an approximate amount of MUS$8,226.69 (including
tax as well as interests and fines). The main observation is Sunat
ignorance of the economic reality corresponding to a transaction
carried out in 2000 by Edegel and its controller Generandes.
Edegel y Generandes entered into a Technical Assistance Contract for
the Development and Management of Projects, according to which
Generandes, directly or indirectly, would provide Edegel engineering,
development, consulting, technical assistance, and construction
supervision services for the development and construction of the
hydro-electric power generating Yanango and Chimay projects.
Generandes sub-contracted its shareholders Entergy Peru and Conosur
to provide, on its behalf, the services it had undertaken. Contracts
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
185
were signed with both companies and the total of the undertaken
obligations was transferred to them in exchange for a fee.
Sunat questions the effective service provision based on the following
arguments:
received. In the opinion of the company’s external legal advisors, the
Court should disregard SUNAT observations to the evidence provided
by the company and assess it again in order to verify whether they
support the service provision.
1.
2.
3.
It considers that Generandes, as well as Conosur and Entergy
Peru (the companies sub-contracted by Generandes) are
holdings without capacity to provide the said services.
It considers that, without documentation proving that Conosur
and Entergy Peru sub-contracted their shareholders (Endesa of
Chile and Entergy Co. from the United States, respectively) to
provide the services to Edegel, it is not possible to accept the
documentation submitted by Edegel and prepared by personnel
from Endesa Chile and Entergy Co.
It considers that development and management of the Yanango
and Chimay projects were carried out by Edegel itself through
its project management, and not by a third party.
Therefore, SUNAT concludes that it is not possible to apply the
Sales General Tax credit right resulting from the invoices issued
by Generandes because it has been established that services
were not provided by Generandes.
The company external legal advisors consider that Sunat evaluation
of the supporting documentation submitted by the company is
subjective and not sufficient to call the operation non-existing,
as SUNAT concludes that the service existed, but was provided by
officials and directors from Edegel itself. SUNAT has not taken into
consideration that the said officials did not receive salaries from
Edegel (they were not employees, therefore, they were not in the
payroll) or fees corresponding to the said services. Also, Sunat has not
taken into consideration that it is obvious that a director’s tasks do
not include managing projects or carrying out their engineering.
SUNAT feels it has proved that the company received a free service
from these official and from other personnel from Endesa Chile and
Entergy Co. and that, at the same time, the company paid Generandes
for a non-existing service. Although it admits that the projects
were completed (but, according to SUNAT, under these officials free
supervision and consulting,) it concludes that there is no motive
between payment to Generandes and Edegel income generation, as
the said payments are not connected with the services received by
its own personnel (employees and directors) who worked without
collecting any salary or fee whatsoever.
The company will appeal against the assessment and fine resolutions
in connection with this observation, rejecting the Administration
arguments for considering the initially submitted evidence insufficient.
The company will submit additional evidence regarding the service
Talleres Moyopampa / Sunat
On July 16, 1997, Talleres Moyopampa S.A. (former Empresa de
Generación Eléctrica de Lima S.A.) was notified with Assessment
Resolution 012-3-05475 and Fine Resolution 012-2-11085.
Through the said Assessment Resolution, SUNAT demands payment of
MUS$351 in addition to the corresponding interest for MUS$270.47,
in order to settle the payment of income tax corresponding to the
1994 fiscal year, as it wrongly considers that payment on those taxes
corresponding to May and June, 1994, were not made.
On the other hand, the Fine Resolution penalizes for the company for
the amount of MUS$351, and MUS$270.47 corresponding to interests,
for allegedly having infringed section 1 of article 178 of the Tax Code
in the company’s annual income tax return corresponding to 1994.
On August 15, 1997, Talleres Moyopampa S.A. filed a remedy
of complaint against the said resolutions, sustaining that the
Agreement signed with the Ministry of Economy and Finance within
the ELECTROLIMA privatizing process established the latter as the
sole entity responsible for the taxes that the Tax Administration
may determine. Also, it was alleged that during the first half of the
1994 fiscal year, the period to which the observations correspond,
ELECTROLIMA was in charge of managing the old Edegel S.A.A.
The remedy of complaint filed by Talleres Moyopampa S.A. was
disregarded through Administration Resolution 015-4-07866, for
which the company filed the corresponding appeal to the Fiscal Court
(Case file 2749-98.)
Currently, the case file is with the Fiscal Court Resolution 9603-2-
2001, which declares the Administration Resolution 015-4-07866
invalid and groundless and orders the Tax Administration to issue
a new ruling, taking into consideration the scope of the Agreement
signed with the Public Treasury General Department of the Ministry
of Economy and Finance.
Secondary liability attribution to Edegel
On August 12, 1998, Edegel (a company split from Talleres
Moyopampa S.A.) was notified through Administration Resolution
012-4-04453, with the alleged purpose of ensuring payment of the
tax debt demanded from Talleres Moyopampa S.A. of the above-
mentioned proceedings. It has been attributed secondary liability
due to its purchase of a part of the assets and liabilities of the said
company.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
186
In these circumstances, and through a written document filed on
September 7, 1998, Edegel supported Talleres Moyopampa S.A.
contesting appeals However, on December 14, 1998, SUNAT issued
Administration Resolution 015-4-09092 declaring Edegel claim
groundless.
On January 21, 1999, Edegel filed and appeal against Administration
Resolution 015-4-09092, where the case file was joined with that
indicated as background to this procedure.
Through Fiscal Court Resolution 9609-2-2001, this body has declared
invalid and groundless Administration Resolution 015-4-09092 in
the parts regarding Assessment Resolution 012-03-05475 and Fine
Resolution 012-2-11085; therefore, the Tax Administration must rule
again due to the same reasons stated in the previous section.
Edegel / Essalud
Currently, the administrative demand filed on July 31, 1996, against
the determination of the amount to be paid carried out by the IPSS
based on Decree Laws 22482 (Health), 19990 (Pensions,) and 18846
(Labor Accidents) for the period between April 1994 and March 1996
is being processed.
The amount considered, regarding the three items, is MUS$2,499.81
plus interest. The company should have a similar result to that
obtained in the other two procedures that concluded one year ago
on the same items. If so, the amount stated by the health regime
of Decree Law 22482 of MUS$2,161.87 plus interests would be
deducted, leaving a probable amount to be paid, of MUS$337.93
plus interest.
Emgesa S.A.
There is an environmental contingency group action against Emgesa
S.A. E.S.P., the Empresa de Energía de Bogotá S.A. E.S.P., and CAR
for alleged material and moral losses caused by the environmental
damage in the Muña reservoir. The plaintiffs’ initial demand is for
M$708,695,120.
Enersis S.A. are defendants or plaintiffs in other minor legal
procedures with probable or reasonably possible loss risk, and whose
individual effects in the case of non-favorable rulings is not significant
in the current consolidated financial statements.
Restrictions:
Enersis S.A.
The Company’s loan agreements establish an obligation to comply
with the following financial ratios, on a consolidated level:
•
•
•
•
•
•
Enersis’s ratio between debt and cash flow for four quarters
and that of its Chilean subsidiaries did not exceed 7.0x;
The ratio of consolidated debt to EBITDA for four consolidated
quarters, not exceeding 5.0x;
The ratio of Enersis and its Chilean subsidiaries cash flow to
financial expenses for four quarters, not less than 1.60x;
The ratio of consolidated debt to shareholders’ equity plus
minority interest not exceeding 80%;
Assets corresponding to companies whose business is regulated,
is not to be less than 50% of the total consolidated assets.
M i n i m u m s h a r e h o l d e r s ’ e q u i t y a t l e a s t e q u a l t o
ThCh$467,560,350 (U.F.27 million)
As of December 31, 2004 all these obligations have been met.
Chilectra S.A.
The Company did not have any management restrictions or financial
covenants during the years ended December 31, 2003 and 2004.
The Company holds long-term energy purchase contracts with Endesa,
Gener S.A., Pangue S.A., Colbún Machicura S.A., Carbomet Energía
S.A., Empresa Eléctrica Puyehue S.A. (formerly Pilmaiquén), Sociedad
Canalistas del Maipo and Iberoamerica de Energía IBENER S.A., the
terms of which extend to beyond 2004, in order to ensure its supply
and corresponding cost.
Endesa S.A. (parent Company)
On a consolidated level, Endesa must comply with financial covenants
and requirements derived from loan agreements with financial
institutions, among which are the following:
•
•
•
•
Endesa’s ratio between debt and cash flow for four quarters
and that of its Chilean subsidiaries did not exceed 9.4x;
The ratio of consolidated debt to EBITDA for four consolidated
quarters, not exceeding 6.30x;
The ratio of Endesa Chile and its Chilean subsidiaries cash flow
to financial expenses for four quarters, not less than 1.5x;
The ratio of consolidated debt to shareholders’ equity plus
minority interest not exceeding 112.50%;
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
187
•
•
Assets corresponding to companies whose business is regulated,
is not to be less than 50% of the total consolidated assets.
Edegel S.A.
M i n i m u m s h a r e h o l d e r s ’ e q u i t y a t l e a s t e q u a l t o
ThCh$779,267,250 (U.F.45 million)
Financial indicators originated by credit contracts, Bonds Program
and Short-term instruments:
As of December 31, 2004 all these obligations have been met.
•
Debt ratio no greater than 0.75
Pehuenche S.A.
As of December 31, 2004 these obligations have been met.
The Santander Investment Bank Ltd. and the Chase Manhattan Bank
N.A., in relation to loans granted to the Company, place obligations
and restrictions on Pehuenche S.A., some of which are of a financial
nature, such as: long-term financial liabilities not exceeding 1.5
times the shareholders’ equity, and a minimum company equity of
ThCh$164,511,975 (UF9,500,000).
As of December 31, 2004 all these obligations have been met.
Central Costanera S.A.
In virtue of the arrangement in Annex VI-A of the “Concurso Público
Internacional para la Venta de las Acciones de Central Costanera
Sociedad Anónima” (International Public Tender for the Sale of shares
of Central Costanera Sociedad Anonima), the domain of Central
Costanera S.A.’s land was transferred subject to the condition that it
used as the location for an electric power plant for a term of twenty
five years as of the date of possession.
If under any circumstance whatsoever the land ceases to be used for
than purpose during the indicated year, its domain shall be considered
revoked due to this cause, and return of such title will be effective
immediately, and as a matter of law, to SEGBA S.A. or, as applicable,
to the National State.
The most demanding requirements in respect to financial coefficients
are those contained in the Syndicated loan, the Agent of which is
BBVA Banco Francés, and in the bilateral with JP Morgan, which are
the following:
•
•
•
The long-term debt with third parties cannot exceed US$235
million; the debt with a maximum of 30 days cannot exceed
US$180 million.
Clauses that restrict change of Control;
Clauses that restrict payments to shareholders, including
subordination of the related debt.
As of December 31, 2004 all these obligations have been met.
Hidroeléctrica Betania S.A.
Covenants include limitations on the payment of related debt and
limitations on change in control and the following financial ratios:
•
•
EBITDA/Senior Financial Debt no less than 1.4
Cash Flows before Dividend Payments/Senior Financial Debt
no less than 1.1
•
Shareholders’ Equity/Senior Debt no less than 2.5.
At December 31, 2004 these coverants have been fully net.
Other restrictions
As a common and habitual practice for some bank loan debts and
also in capital markets, a substantial portion of Enersis S.A.’s financial
indebtedness is subject to cross-failure provisions. Some failures of
relevant subsidiaries, if not corrected in time (as to those specific
provisions allowing a year of time to correct the problem), might
result in the cross-failure at the Endesa-Chile and Enersis S.A. level.,
and, in this case, a significant percent of Enersis S.A.’s consolidated
liabilities might eventually become due on demand.
Non-payment, after any applicable grace period, of these companies’
debts or of those corresponding to some of their most relevant
subsidiaries for an individual amount exceeding the equivalent of 30
million dollars, would cause advanced payment of syndicated credits
contracted in 2004. Also, non-payment, after any applicable grace
period, of these companies’ debts or of those corresponding to any of
their subsidiaries for individual amounts exceeding the equivalent of
30 million dollars, would cause advanced payment of Yankee bonds.
In addition, some credit agreements contain provisions according to
which certain events different from non-payment in these companies
or in any of their most relevant subsidiaries, such as bankruptcy,
insolvency, adverse executed legal sentences for amounts larger
than US$ 50 million, and expropriation of assets, may cause those
credit acceleration clauses to be in effect.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
188
There are no clauses in the credit agreements through which
changes in these companies corporate or debt classification by
risk classification agencies may cause an obligation to make debt
prepayments. However, according to the Standard & Poor (S&P)
risk classification agency, a variation in the foreign currency debt
risk classification produces a change in the applicable margin of
syndicated credits contracted in 2004.
At December 31, 2004, these obligations and restrictions have been
fully met.
N OTE 30. SU RE TIES O BTAI N ED FROM TH IRD PARTIES
Enersis S.A.
Endesa S.A. (parent Company)
The Company has received certificates of deposit for
ThCh$242,994 at December 31 2004 (ThCh$233,785 in 2003).
Chilectra S.A.
The Company has received performance bonds from contractors
and third parties to guarantee jobs and construction (mainly the
Ralco Project), for ThCh$12,746,232 as of December 31, 2004
(ThCh$19,952,181 in 2003).
The Company presents among its current liabilities, deposits
received in cash for the use of temporary connections by customers
of the company for ThCh$49,332 and ThCh$28,237 at December 31,
2003 and 2004, respectively.
San Isidro S.A.
Documents in guarantee have been received for ThCh$0 as of
December 31, 2004 (ThCh$1,424,411 in 2003).
Inmobiliaria Manso de Velasco Ltda.
Compañía Eléctrica de Tarapacá S.A.
The Company has received guarantees from third parties
to guarantee obligations incurred in the acquisition of assets
of ThCh$1,738,223 as of December 31, 2004 (ThCh$3,161,818 in
2003).
The Company has received documents in guarantee for
ThCh$223,843 as of December 31, 2004 (ThCh$294,202 in 2003).
Enigesa S.A.
Compañía Americana de Multiservicios Ltda.
The Company has received documents in guarantee for
ThCh$20,000 as of December 31, 2004. (ThCh$46,956 in 2003).
The Company has delivered bank bonds for ThCh$4,700,464
(ThCh$760,775 in 2003) and has received bank bonds for
ThCh$2,305,702 (ThCh$1,565,159 in 2003).
Pangue S.A.
The Company has received documents in guarantee for
ThCh$5,186 as of December 31, 2004 (ThCh$10,073 in 2003).
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 31. FO REI G N CU RREN CIES
As of December 31, 2003 and 2004, foreign currency denominated assets and liabilities are as follows:
189
a) Current assets
Account
Cash
Time deposits
Marketable securities
Accounts receivable, net
Notes receivable
Other receivables
Amounts due from related companies
Inventories, net
Income taxes recoverable
Prepaid expenses and other
Deferred income taxes
Other current assets
Currency
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
US$
$ Col.
$ Arg.
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
U.C.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
Soles
$ Arg.
Reales
As of December 31,
2003
ThCh$
4,475,428
1,051,927
8,128,041
1,046,050
4,226,021
8,102,021
150,656,992
64,890,182
1,792,199
4,520,396
40,801,202
4,993
2,901,493
236,903
8,291,246
1,072,500
104,405,263
6,945,168
86,307,575
29,562,766
44,785,076
205,771,276
4,630,918
1,333,327
647,945
23,366
-
1,936,137
40,900,332
9,938,644
1,335,543
20,255,164
5,377,821
977,538
16,731,819
1,032,262
5,822,947
3,331,840
35,294
129,348
5,282,251
2,884,948
29,507,945
4,441,448
9,275,106
1,648,121
543,279
35,024,812
603,438
762,416
4,808,109
21,619,721
1,124,828
1,531,917
218,488
252,478
797,190
12,938,905
35,276,929
3,402,950
9,352,029
4,992,003
818,261
46,568,412
10,892,528
1,400,414
2,262,288
13,835,099
2004
ThCh$
3,150,244
6,580,859
27,027,163
1,341,377
2,389,222
16,005,549
234,366,548
177,779,349
1,095,113
5,855,305
31,647,544
4,993
4,686,733
927,807
6,702,004
3,539,809
116,070,684
7,281,743
109,719,689
33,403,904
49,950,207
208,774,093
-
891,218
233,126
-
21,308
1,682,362
2,985,441
28,429,986
983,456
11,449,313
4,926,064
1,280,003
13,759,939
-
2,170,591
106,983,306
-
116,358
3,393,757
1,721,751
33,232,156
5,184,659
9,011,283
2,338,831
1,214,386
70,398,500
15,732,686
1,623,292
2,546,982
7,336,412
1,162,558
1,516,852
1,136,210
1,010,321
816,287
39,368,960
49,308,731
949,786
9,573,388
173,812
151,489
29,996,521
1,093,546
1,405,979
321,522
3,148,123
Total current assets
1,156,481,276
1,519,081,190
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
190
b) Property, plant and equipment
Account
Land
Currency
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
As of December 31,
2003
ThCh$
41,777,562
29,133,766
8,670,485
8,419,958
30,338,358
2004
ThCh$
52,338,344
26,530,812
7,951,724
7,724,720
28,061,395
Building, infrastructure and work in progress
$ no Reaj.
3,538,008,367
3,624,231,407
Machinery and equipment
Other plant and equipment
Technical appraisal
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
Reales
2,765,131,519
2,537,436,134
1,021,951,727
951,907,447
1,423,871,557
1,322,175,663
1,556,321,432
1,429,235,015
53,334,336
22,507,774
388,475,456
665,909,330
676,065,676
127,322,197
9,472,574
36,278,327
122,298,330
61,420,508
29,601,418
62,173,087
428,561,045
114,622,461
85,322,291
22,481,645
357,431,602
623,547,755
632,336,970
134,019,551
17,284,629
32,595,808
108,157,283
106,652,048
29,794,577
56,938,410
392,478,253
104,971,798
Accumulated depreciation
$ no Reaj.
(1,602,279,713)
(1,685,445,219)
$ Col.
Soles
$ Arg.
Reales
(690,224,493)
(711,423,578)
(859,351,499)
(822,014,062)
(969,733,183)
(963,750,414)
(801,308,839)
(824,150,066)
Total property, plant and equipment
8,298,769,523
7,684,821,942
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
c) Other assets
Account
Investments in related companies
Investments in other companies
Goodwill, net
Negative goodwill, net
Long-term accounts receivable
Amounts due from related companies
Other assets
191
Currency
$ no Reaj.
US$
$ no Reaj.
US$
$ Col.
Soles
Reales
$ no Reaj.
US$
$ Col.
$ no Reaj.
US$
$ Col.
Soles
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
US$
Reales
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
As of December 31,
2003
ThCh$
108,073,015
76,643,743
2,341,160
-
134,321,257
8,441
125,946
2004
ThCh$
107,682,826
83,782,236
2,378,053
27,213,438
20,312,213
7,731
81,319
756,029,451
704,752,310
5,509,044
38,368,653
(17,082,960)
(13,518,672)
(4,674,109)
(45,939,757)
3,577,465
1,954,002
4,661,886
7,814,513
2,103,001
2,504,339
12,696,787
16,086,006
(12,939,841)
(8,104,372)
(2,569,614)
(33,121,987)
1,488,725
1,273,568
3,509,615
6,687,455
2,216,011
6,487,025
108,518,214
104,247,690
609,105
131,562,999
159,325
5,425,595
63,941,140
21,239,485
25,374,006
3,548,541
16,568,392
87,875,268
334,097
122,111
38
-
52,469,411
23,071,340
46,128,153
2,828,521
27,509,762
106,991,380
Total other assets
1,527,642,488
1,303,622,007
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
192
d)
Total assets
Account
Total assets by currency
Total assets by currency
e) Current liabilities
Currency
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
U.C.
As of December 31,
2003
ThCh$
56,425,071
3,377,112,608
405,393,838
2,587,918,030
1,033,927,731
1,356,788,988
2,164,294,759
1,032,262
2004
ThCh$
8,165,464
3,431,027,557
506,017,324
2,385,798,927
946,214,739
1,217,040,610
2,013,260,518
-
10,982,893,287
10,507,525,139
Within 90 days
91 day to 1 year
As of December 31, 2003
As of December 31, 2004
As of December 31, 2003
As of December 31, 2004
Account
Currency
Amount
ThCh$
Average
Amount
Average
Rate
ThCh$
Short-term debt due to banks and
$ no Reaj.
2,438,349
2.99%
2,434,847
Amount
ThCh$
Average
Amount
Average
Rate
ThCh$
Rate
-
0.00%
-
0.00%
44,663,417
12.71%
426,911
financial institutions
Current portion of long-term debt
due to banks and financial
institutions
Current portion of bonds payable
Current portion of long-term
notes payable
Dividends payable
US$
Euro
$ Col.
Soles
$ Arg.
Reales
Others
$ Reaj.
US$
Euro
Yen
$ Arg.
$ Col.
Reales
U.P.
Others
$ Reaj.
US$
$ Arg.
$ Col.
Soles
Reales
US$
Reales
Rate
3.00%
3.92%
3.00%
7.31%
5.85%
8.99%
84,814,231
12.71%
54,848,068
3,588,066
5.00%
908,779
117,353,815
15.93%
49,065,716
28,458,882
15.93%
23,369,915
10,516,380
15.93%
6,151,050
239,979
15.93%
52,128,449
16.76%
16,220,984
15.93%
1,479,491
22,379,370
4.56%
4.96%
-
0.00%
13,510,451
3.46%
-
-
5,173,030
-
-
-
0.00%
20,194
0.00%
0.00%
5.60%
0.00%
0.00%
9.70%
984,760 16.79%
-
0.00%
-
0.00%
944,426 16.79%
-
-
235,855
5.88%
151,779
4,482,124
7.87%
22,240,292
-
0.00%
5,744
0.00%
0.00%
5.80%
8.10%
7.00%
6,991,505
11.25%
6,019,981
11.16%
-
-
0.00%
0.00%
11,666,373
15.93%
-
-
-
35,461,819
82,429,959
126,861
435,146
-
-
0.00%
0.00%
0.00%
4.56%
4.96%
3.00%
3.46%
0.00%
0.00%
1,144,981
16.79%
1,344,077
16.79%
7,543,814
37,890,558
-
-
3,854,757 16.79%
4,716,740
15.81%
5,741,290
16.79%
10,079,596
14.93%
-
-
-
2,589,394
-
-
1,700,403
67,353,491
125,395
412,818
2,405,568
5.87%
0.00%
0.00%
0.00%
9.25%
0.00%
0.00%
9.00%
7.05%
3.00%
0.90%
3.79%
14,538,378
12.45%
-
0.00%
415,332
7,670,851
32,737,993
153,456
-
-
-
18,174,027
-
-
-
-
-
-
-
1,653
-
-
-
-
-
5.88%
6.00%
8.00%
8.50%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
5.88%
7.87%
0.00%
0.00%
4.94%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
6,787,140
4.94%
18,602,854
6.23%
8,787,827
-
0.00%
19,501,097
20.31%
-
8,176,632
0.00%
-
$ no Reaj.
1,006,694
$ Col.
Soles
$ Arg.
Reales
2
82,109
749
1,413,566
6,567,034
2,008,600
722,922
2
18,179
1,566
2,656,832
84,313,435
4,351,182
258,353
31,241,735
19,585,347
45,782,706
67,468,092
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
13,793,078
-
734,392
-
-
-
-
-
349
-
-
-
-
-
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Accounts payable
$ no Reaj.
66,370,396
US$
Euro
$ Col.
Soles
$ Arg.
861,067
156,741
28,960,109
17,360,048
29,090,974
Reales
78,030,649
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
e) Current liabilities, continued
Within 90 days
91 day to 1 year
193
Account
Short-term notes payables
Miscellaneous payables
Amounts payable to related
companies
Accrued expenses
Withholdings
Income tax payable
Deferred income
Other current liabilities
Total current liabilities by currency
Currency
$ no Reaj.
US$
Reales
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ no Reaj.
$ Col.
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
$ Col.
$ Reaj.
$ no Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
Euro
Yen
$ Col.
Soles
Reales
$ Arg.
U.P.
Others
Amount
ThCh$
Amount
ThCh$
Amount
ThCh$
Amount
ThCh$
As of December 31, 2003 As of December 31, 2004 As of December 31, 2003 As of December 31, 2004
Average
Rate
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
559
-
7,181,201
2,871,840
959,372
9,887,281
4,672,384
3,505
11,464,093
480,831
56,725,083
-
476,526
525,460
23,300,775
69,517
10,791,076
-
7,578,841
2,872,127
3,179,885
7,650,469
10,793,064
2,753,830
6,105,833
12,493,955
17,551,516
394,297
42,420,816
2,790,566
1,187,223
7,146,632
8,659
4,872,530
-
1,121
464,355
98,023
2,525,483
46,868
24,119,118
10,542,045
-
-
-
5,636,239
63,908
-
-
-
-
-
-
-
-
-
-
84,878
29,393,686
69,574
-
2,536,430
-
11,108
161,356
-
-
-
-
-
2,229,391
3,007,496
-
-
-
1,972,547
-
6,084
2,865,946
1,236,032
-
-
-
-
18,809
-
21,577,819
5,400,636
6,876,299
11,010,389
8,821,069
2,583
7,203,285
255,365
1,464,924
2,923,148
394,992
1,732,753
24,745,818
30,095
7,194,918
1,050
5,712,516
1,566,538
2,939,181
5,506,856
8,026,256
2,265,795
5,155,760
17,274,242
32,411,616
16,822,260
23,507,327
19,809
-
3,449,774
-
6,127,909
4,174,302
10,242
10,919
9,380,424
1,497,109
45,669
21,369,668
30,572,763
-
6,227,405
-
5,947,717
721,873
-
2,078,438
-
-
-
-
-
-
-
-
75,770
11,935,030
180,402
-
-
-
-
-
-
-
51,320
-
479,246
-
-
-
-
-
1,623,507
-
376,487
2,258,422
748,752
-
-
-
-
Average
Rate
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Average
Rate
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Average
Rate
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
1,755,683
113,672,511
138,436,121
3,744,807
13,510,451
205,380,777
68,692,016
209,006,882
82,926,530
-
17,165,410
231,076
118,139,756
150,962,084
1,167,132
-
151,493,685
78,540,599
233,316,541
93,470,406
-
-
43,096,595
40,764,166
180,146,875
126,861
435,146
2,229,391
25,998,126
5,752,398
-
1,144,981
1,344,077
9,823,511
22,243,922
126,572,507
125,395
412,818
14,538,378
2,078,438
10,079,596
5,199,738
-
415,332
Total current liabilities
854,291,188
827,321,279
301,038,616
191,489,635
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
194
f)
Long-term liabilities as of December 31, 2004
Account
Currency
Due to banks and financial
$ Reaj.
institutions
Bonds payable
Long-term notes payable
Miscellaneous payable
Accrued expenses
US$
Euro
$ Arg.
$ Col.
Reales
$ Reaj.
US$
$ Col.
Soles
$ Arg.
Reales
US$
Reales
$ Reaj.
$ no Reaj.
US$
Reales
$ Reaj.
$ no Reaj.
$ Col.
Reales
Deferred income taxes
$ no Reaj.
Other long-term liabilities
Soles
$ Reaj.
$ no Reaj.
US$
Soles
$ Arg.
Reales
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
Amount
ThCh$
1,698,508
91,767,757
1,808,395
5,520,964
313,735
Average
Rate
9.00%
6.95%
3.00%
3.96%
9.00%
Amount
ThCh$
1,008,580
357,086,797
-
3,536,601
Average
Rate
9.00%
3.65%
0.00%
1.75%
27,212,269
12.45%
Amount
ThCh$
-
25,386,640
-
2,652,453
-
Average
Rate
0.00%
8.59%
0.00%
1.75%
0.00%
62,043,271
15.22%
7,569,269
16.77%
37,595,086
16.47%
Amount
ThCh$
-
911,946
-
-
-
-
103,902,300
300,996,000
6.20%
7.27%
69,910,209
457,068,000
6.19%
8.03%
84,746,197
418,050,000
5.17%
7.90%
59,484,067
511,073,929
Average
Rate
0.00%
5.78%
0.00%
0.00%
0.00%
0.00%
5.95%
7.79%
39,535,092
15.53%
84,840,185
10.60%
174,934,536
12.13%
68,381,485
22,464,484
7.58%
7.50%
46,303,253
20.64%
16,980,959
-
-
47,953,491
7.22%
32,006,890
6.97%
0.00%
0.00%
7.28%
17,983,304
-
8.83%
0.00%
16,846,109
16.00%
19,926,002
7.42%
-
0.00%
27,355,685
10.92%
5,763,842
10.92%
10,221,301
10.92%
26,857
10.92%
-
727,204
15,040,244
12,567,061
121,124
3,442,268
70,078,692
207,120,842
16,295,211
27,191,732
66,693,221
15,186,054
1,994,962
925,586
7,969,587
18,622,479
0.00%
0.00%
4.14%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
1,795,204
-
-
2,972,036
-
1,157,644
2,447,289
-
12,534
1,361,106
-
639,812
-
-
70,931,323
6,780,431
847,956,891
-
112,052,454
17,620,771
3,536,601
14,490,755
0.00%
0.00%
6.50%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
5,614,137
-
-
7,316,529
-
5,135,478
2,907,066
-
-
1,573,672
-
1,151,537
-
-
0.00%
0.00%
6.50%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
84,746,197
11,797,267
468,976,779
-
174,934,536
19,134,841
2,652,453
69,797,974
0.00%
0.00%
6.50%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
167,268
-
14,672,591
-
-
13,680,660
-
-
14,694,590
-
-
13,213
-
-
-
-
59,651,335
28,388,463
526,658,466
-
-
-
-
26,857
Total long-term liabilities
$ Reaj.
172,415,153
by currency
$ no Reaj.
35,650,737
US$
Euro
$ Col.
Soles
$ Arg.
457,752,454
1,808,395
109,927,519
96,498,803
35,955,035
Reales
374,012,591
Total long-term liabilities
1,284,020,687
1,073,369,226
832,040,047
614,725,121
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
g) Long-term liabilities as of December 31, 2003
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
195
Account
Currency
Due to banks and financial
institutions
Bonds payable
Long-term notes payable
Miscellaneous payable
Amounts payable to related companies
Accrued expenses
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
by currency
$ Reaj.
US$
Euro
Yen
$ Arg.
$ Col.
Reales
Pound
$ Reaj.
US$
$ Col.
Soles
US$
Reales
$ Reaj.
$ no Reaj.
US$
Reales
$ Col.
$ no Reaj.
US$
$ Col.
Reales
$ no Reaj.
$ Reaj.
$ no Reaj.
US$
Soles
$ Arg.
Reales
$ Reaj.
$ no Reaj.
US$
Euro
Yen
$ Col.
Soles
$ Arg.
Reales
Pound
Amount
ThCh$
3,167,804
205,570,231
124,781
432,999
3,685,689
Average
Rate
9.00%
4.77%
3.00%
0.89%
1.75%
Amount
ThCh$
1,305,528
448,913,335
-
-
1,842,844
Average
Rate
9.00%
3.83%
0.00%
0.00%
1.75%
Amount
ThCh$
Average
Rate
Amount
ThCh$
Average
Rate
-
0.00%
-
0.00%
45,212,332
-
-
6,450,209
3.36%
0.00%
0.00%
1.75%
2,535,154
-
-
-
-
3.89%
0.00%
0.00%
0.00%
0.00%
-
0.00%
-
0.00%
-
0.00%
38,338,946
12.55%
-
0.00%
82,677,254
22.50%
4,887,591
20.81%
8,653,443
20.06%
531,883
17.74%
412,209
6,263,066
121,729,000
4.63%
5.88%
7.91%
105,570,083
10.50%
76,461,688
41,482,653
4.39%
7.42%
-
113,188,072
219,112,200
-
10,409,782
49,425,883
0.00%
5.88%
7.91%
0.00%
4.39%
7.42%
104,378,205
486,916,000
5.88%
7.91%
-
0.00%
859,784
32,636,810
4.39%
7.42%
11,611,380
14.46%
4,696,312
14.46%
9,123,707
14.46%
-
0.00%
884,934
5,357,366
8,692,608
86,428
2,511,857
0.00%
0.00%
0.00%
0.00%
0.00%
-
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
21,219,190
232,597,309
118,323
9,430
3,542,274
13,099,358
2,109,649
8,171,645
23,822,941
9,440,300
7,057,388
387,238,608
124,781
432,999
126,875,701
78,571,337
11,857,334
359,401,492
412,209
-
-
-
3,223,970
-
2,674,905
3,045,975
46,218,706
-
7,076,619
11,800
998,700
5,284,063
715,703
-
-
114,505,400
10,750,224
725,781,456
-
-
84,557,652
11,125,485
1,842,844
12,807,873
-
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
-
-
-
-
6,391,560
-
-
-
-
6,575
1,171,374
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-
0.00%
1,218,766
-
-
0.00%
0.00%
0.00%
104,384,780
7,562,934
564,765,142
-
-
-
2,078,550
6,450,209
17,777,150
-
97,345,804
5.88%
7.91%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
3.26%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
1,014,543,656
-
-
-
-
167,520
18,013
9,128,388
-
-
10,692,906
-
-
-
-
-
1,682,754
-
-
-
-
97,513,324
12,393,673
1,026,207,198
-
-
-
-
-
531,883
-
Total long-term liabilities
981,412,149
961,370,934
703,018,765
1,136,646,078
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
196
N OTE 32. SANC TI O NS
Endesa S.A.
Chilectra S.A.
On April 27, 2004, through Exempt resolution 814, the
Superintendence of Electricity and Fuel (S.E.C.) penalized the
Company for a total amount of 1,830 UTA (ThCh$665,564), as a
result of the blackout which occurred in January 13, 2003, that
affected the area between Tal Tal and Santiago. On May 7, 2004,
the Company filed an appeal whose jurisdiction and solution belongs
to the Superintendency of Electricity and Fuel (S.E.C.). The appeal
is still pending for resolution. Against the resolution solving the
petition of appeal, the company could file a claim petition whose
jurisdiction and resolution’s jurisdiction is Santiago Court of Appeal.
To this date, the Corporation cannot exactly forecast the effects the
final resolution will have on its financial statements.
During the year from January 1 to December 31, 2004, the
Company and its subsidiaries have made disbursements for a value
of ThCh$3,521,010 (ThCh$12,449,554 in 2003), which mainly
correspond to:
Operation expenses: They correspond to laboratory studies,
monitoring, follow-up and analysis, which resulted in expenses of
the fiscal year ThCh$527,033. Cachoeira Dourada S.A. environmental
commitment and cooperation activities equivalent to ThCh$107,095.
Environmental protection at Central Costanera (cleaning of fuel tanks,
screen chamber construction, medication of gas fumes and other),
was equivalent to ThCh$73,577.
Muña environmental lawsuit in Emgesa for ThCh$521,680.
The Company and its directors has not been the subject to
Investment related to the following projects, which are
sanctions by the SVS nor by any other administrative authorities.
activated, ThCh$2,291,625:
N OTE 33. ENVIRO N MENT
Chilectra S.A.
The Company has made disbursements during the year of
ThCh$1,475,427 (ThCh$1,600,026 in 2003), mainly for the following
items:
Investments:
Implementation of Environmental Management System, ISO
Standard 14.001
Reforestation
Pre-assembling.
Expenses:
Pruning
Cutting.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Ralco Power Plant – Environmental Program.
Pehuenche, Loma Alta, and Curillinque Power Plants –
Standardization of sewerage and drinking water systems.
Sauzalito Power Plant – Standardization of sewerage and
drinking water systems.
Antuco Power Plant – Implementation of the Environmental
Management System in accordance with ISO Standard 14,001
and liabilities resolution.
Rapel Power Plant – Environmental Circuit.
San Isidro Power Plant – Environmental Circuit.
Pangue Power Plant – Landscape recuperation, former Queuco
deposit.
Isla Power Plant – Construction of spillway buckets in power
transformers.
Sauzal Power Plant – Works in service transformers spillway
bucket and SGA certification in ISO Standard 14,001.
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N OTE 34. SU BSEQ U ENT E VENTS
Endesa S.A.
On January 21, 2005, Endesa S.A. communicated to the
Superintendency of Securities and Insurance the following relevant
fact:
“During December, 2004, the Experts’ Panel provided in the
Power Service Basic Law resolved a series of differences filed by power
companies, members of the CDEC-SIC in connection with the firm
power calculation inside the said agency.
Considering the resolutions issued by the said Experts’ Panel
on December 9, 2004, the Operation Department of the CDEC-SIC
informed the power generating companies in the system, during
this week, on the results of the readjustment of firm power balance
corresponding to the April 2000 to March 2004 period, as well as on
the result of the said readjustments for the April 2004 to November
2004 period.
As a result of the said readjustments carried out by the CDEC-
SIC, and their subsequent payment, the consolidated financial
statements of Empresa Nacional de Electricidad S.A. will be negatively
affected in an amount of $14,522,772,161 for the April 2000 to March
2004 period, and in an amount of $ 3,665,377,677 during the April
2004 to November 2004 period.
Empresa Nacional de Electricidad S.A. considers it necessary to
inform the market that, notwithstanding the fact that the company
will carry out the payments resulting from the said readjustment, this
does not mean that it approves them. In fact, Empresa Nacional de
Electricidad S.A. reserves the right to exhaust every legal means for
contesting, considering that the fundamental guarantees protected
by the State Political Constitution were affected in the said resolutions
by the Experts’ Panel and Ministry Resolution 35 of the Ministry of
Economy. Furthermore, and according to the information provided to
the market, on December 28, 2004, Empresa Nacional de Electricidad
S.A. filed a Public Law Invalidity appeal against Ministry Resolution 35
of the Ministry of Economy, which untimely and with no competence
opened power readjustments between the system power generating
companies for the 2000-2003 period.
In this sense, we consider it our duty to inform the market that
last January 20, the Empresa Nacional de Electricidad S.A. requested
the CDEC-SIC to call an extraordinary board of directors meeting in
order to take a stand regarding the representation the CDEC-SIC made
of the Laja and Rapel reservoirs in the calculation of firm power,
which will probably generate new differences to be resolved by the
Experts’ Panel.
The amounts indicated in the previous relevant fact have been
provisioned in the companies’ financial statements to December
31, 2004.
In the period between January 1, 2005, and to the date of
issue of these financial statements, no other significant facts have
occurred that may affect their submission.
Juan Carlos Weiczorek C.
Subgerente Contabilidad Chile
Mario Vacarce Duran
Gerente Gerenal
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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N OTE 35.
APPEN D IX U.S. GA AP
D IFFERENCES BE T WEEN CH ILE AN AN D
U N ITED STATES GEN ER ALLY ACCEP TED
equipment is an accounting principle not generally accepted under
U.S. GAAP, therefore, the effects of the reversal of this revaluation,
as well as of the related accumulated depreciation and depreciation
expense are included in paragraph (gg) below.
ACCO U NTI N G PRI NCIPLES
(c) Depreciation of property, plant and equipment
Chilean GAAP varies in certain important respects from U.S.
GAAP. Such differences involve certain methods for measuring the
amounts shown in the financial statements.
I. Differences in Measurement Methods
The principal differences between Chilean GAAP and U.S. GAAP
are described below together with an explanation, where appropriate,
of the method used in the determination of the adjustments that
affect net income and total stockholders’ equity. References below
to “SFAS” are to Statements of Financial Accounting Standards issued
by the Financial Accounting Standards Board in the United States.
(a)
Inflation accounting
The cumulative inflation rate in Chile as measured by the
Consumer Price Index for the three-year period ended December
31, 2004 was approximately 6.52%. Pursuant to Chilean GAAP, the
Company’s financial statements recognize certain effects of inflation.
The inclusion of price-level adjustments in the accompanying
consolidated financial statements is considered appropriate under
the prolonged inflationary conditions affecting the Chilean economy
even though the cumulative inflation rate for the last three years
does not exceed 100%. As allowed pursuant to Item 17 c (iv) of Form-
20-F the reconciliation included herein of consolidated net income,
comprehensive income and shareholders’ equity, as determined in
accordance with U.S. GAAP, excludes adjustments attributable to
the effect of differences between the accounting for inflation under
Chilean GAAP versus U.S. GAAP.
(b) Reversal of revaluation of property, plant and
equipment
In accordance with standards issued by the SVS., certain
property, plant and equipment are recorded in the financial
statements at amounts determined in accordance with a technical
appraisal. The difference between the carrying value and the revalued
amount is included in shareholders’ equity, beginning in 1989, in
“Other reserves”, and is subject to adjustments for price-level
restatement and depreciation. Revaluation of property, plant and
Under Chilean GAAP, certain costs related to the cost of
acquisition of Edesur S.A., at the time of the acquisitions in 1992
and 1994 by Distrilec Inversora S.A., were charged to earnings as
incurred. Under U.S. GAAP, these costs would have been included in
the purchase price and would have been allocated to the net assets
acquired based upon fair values. For purposes of the reconciliation
to U.S. GAAP, these costs were considered to be of part of property,
plant, and equipment, the primary assets of Edesur S.A.
As discussed in paragraph (i), under Chilean GAAP, assets
acquired and liabilities assumed are recorded at their carrying
value, and the excess of the purchase price over the carrying value is
recorded as goodwill. Under U.S. GAAP, assets acquired and liabilities
assumed are recorded at their estimated fair values, and the excess of
the purchase price over the estimated fair value of the net identifiable
assets and liabilities acquired is recorded as goodwill. As part of the
purchase of the majority ownership interest in Endesa-Chile, under
U.S. GAAP, the cost of the purchase price would have been allocated
to the fair value of property, plant and equipment.
The effect on shareholders’ equity and net income for the years
presented is included in paragraph (gg) below.
(d)
Intangibles
Under Chilean GAAP, the intangible assets correspond mainly
of rights of way. Additionally the Company has recorded intangible
asset relating to the transfer of revalued assets which originate in the
predecessor company, “Compañía Chilena de Distribución Eléctrica
S.A.” at the time of the Company’s formation. Under U.S. GAAP, the
balance of this intangible asset would have been recorded at the
Predecessor Company’s carrying value which was zero. In 2004, this
intangible asset was charged to income under Chile GAAP thereby
zeroing out the adjustment for this item between U.S. GAAP and
Chile GAAP.
The estimated amortization expense for the intangible assets
which, mainly consist of rights of way, for US GAAP purposes (which
is equivalent under Chile GAAP) for each of the five succeeding fiscal
years is as follows:
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199
Year
2005
2006
2007
2008
2009
Amortization
ThCh$
5,477,874
4,459,668
3,295,044
1,855,711
1,217,734
The effects of adjusting shareholders’ equity for this intangible
asset net of accumulated amortization, inclusive of accumulated
price-level restatement, and net income for the annual amortization
expense and the write-off of the intangible asset in 2004 are included
in paragraph (gg) below.
(e) Deferred income taxes
Under Chilean GAAP, until December 31, 1999, deferred income
taxes were recorded based on non-recurring timing differences
between the recognition of income and expense items for financial
statement and tax purposes. Accordingly, there was an orientation
toward the income statement focusing on differences in the timing of
recognition of revenues and expenses in pre-tax accounting income
and taxable income. Chilean GAAP also permitted not providing for
deferred income taxes where a deferred tax asset or liability, was
either offsetting or not expected to be realized. Starting January
1, 2000, the Company recorded income taxes in accordance with
Technical Bulletin No. 60 of the Chilean Association of Accountants,
recognizing, using the liability method, the deferred tax effects of
temporary differences between the financial and tax values of assets
and liabilities. As a transitional provision, a contra (referred to as
“complementary”) asset or liability has been recorded offsetting the
effects of the deferred tax assets and liabilities not recorded prior
to January 1, 2000. Such complementary asset or liability are being
amortized to income over the estimated average reversal periods
corresponding to the underlying temporary differences to which the
deferred tax asset or liability relates.
Under U.S. GAAP, companies must account for deferred taxes
in accordance with SFAS No. 109, which requires an asset and liability
approach for financial accounting and reporting of income taxes,
under the following basic principles:
i.
A deferred tax liability or asset is recognized for the estimated
future tax effects attributable to temporary differences and
tax loss carryforwards.
ii.
iii.
The measurement of deferred tax liabilities and assets is based
on the provisions of the enacted tax law. The effects of future
changes in tax laws or rates are not anticipated.
The measurement of deferred tax assets are reduced by a
valuation allowance, if, based on the weight of available
evidence, it is more likely than not that some portion of the
deferred tax assets will not be realized.
Temporary differences are defined as any difference between
the financial reporting basis and the tax basis of an asset and liability
that at some future date will reverse, thereby resulting in taxable
income or expense. Temporary differences ordinarily become taxable
or deductible when the related asset is recovered or the related
liability is settled. A deferred tax liability or asset represents the
amount of taxes payable or refundable in future years as a result of
temporary differences at the end of the current year.
The principal difference between U.S. GAAP and Chile GAAP
relates to the reversal of the complementary assets and liabilities
recorded as a transitional provision for unrecorded deferred taxes
as of January 1, 2000 and their corresponding amortization into
income. Additionally, under U.S. GAAP, temporary differences arising
in connection with fair value adjustments on business combinations
result in deferred taxes and a corresponding adjustment to goodwill.
An adjustment is required in the reconciliation to U.S. GAAP to record
goodwill arising from deferred tax liabilities related to past business
combinations. When required, the income tax effects of U.S. GAAP
adjustments are recorded in our reconciliations to U.S. GAAP. The
effect of these differences on the net income and shareholders’ equity
of the Company is included in paragraph (gg) below.
(f) Severance indemnity
As described in Note 2 n, under the Company’s employment
contracts, it has committed to provide a lump sum payment to each
employee in its Chilean entities at the end of their employment,
whether due to death, termination, resignation or retirement. Until
December 31, 2003, those obligations are calculated based on the
present value of the liability determined at each year-end based on
the current salary and average service life of each employee. The
Company and its Chilean subsidiaries used a discount rate of 9.5%
for the years ended December 31, 2002 and 2003. As described in
Note 3, starting January 1, 2004 the Company changed certain of its
underlying assumptions related to its severance indemnities changing
the discount rate of 6.5% and modifying the turnover rate.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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200
Under US GAAP, this arrangement is considered to be a
termination indemnity plan and should therefore be accounted for in
accordance with SFAS No. 87, “Employers’ Accounting for Pensions”.
The liability would be measured at the actuarial present value as of
the balance sheet of all benefits attributed by the severance indemnity
benefit formula to employee service rendered prior to the balance
sheet. The vested benefit obligation is measured using assumptions as
to future compensation levels. For U.S. GAAP purposes, the discount
rate has to be reassessed every year, to the relevant discount rate
for the period between the date and the expected date of payment.
In 2003, the Company, for US GAAP purposes, used a 6.5% discount
rate in according with the above guidance. The impact of using
the appropriate discount rates under US GAAP for 2002 and 2003
would not have resulted in a material difference from the obligation
recorded at the rate in use in accordance with Chilean GAAP.
Therefore, in 2004, the accounting assumptions underlying
the calculation of the obligation for staff severance indemnities were
the same under Chile GAAP and US GAAP.
The Company recognizes actuarial gains and losses immediately
for severance indemnity plans for both Chilean GAAP and U.S.
GAAP.
The effects of accounting for severance indemnity benefits
under US GAAP have been presented in paragraph (gg).
(g) Pension and post-retirement benefits accounting
The Company has obligations related to post-retirement
benefits as stipulated in collective bargaining agreements and pension
obligations as stipulated by contract for its subsidiaries in Brazil,
Colombia and Chile under U.S. GAAP, post-retirement benefits are
accounted for under SFAS 106 and pension obligations are accounted
for under SFAS 87 which results in the following differences:
i.
In 2000, the Company recorded its obligation for post-
retirement benefits at our consolidated subsidiaries, Cerj
and Coelce under Chilean GAAP. Technical Bulletin 8 allows
the Company to record a transition asset for post-retirement
benefits and pension obligations, as calculated under Chilean
GAAP, and to amortize the amount, on a straight-line basis, for
up to five years. The Company is amortizing this amount over a
period of three years. Cerj and Coelce had adopted U.S. GAAP
for external reporting purposes prior to 2000 and there was
no remaining unamortized transition obligation. Therefore,
the amortization that is appropriately being recorded under
Chilean GAAP for the transition asset related to post-retirement
benefits and pensions is reversed in our reconciliation to U.S.
GAAP.
ii.
Under both Chilean GAAP and US GAAP, actuarial gains/
losses are deferred over the average remaining service period
when the cumulative amount of deferred actuarial gains and
losses are less than 10% of the higher of the projected benefit
obligation or fair value of plan assets.
Chilean GAAP recognizes an additional minimum liability,
similar to that defined under SFAS 87, through the income
statement. Under US GAAP, if the amount of the additional
minimum liability required to be recognized exceeds the
unrecognized prior service costs, the excess shall be reported as
a separate component within other comprehensive income net
of any tax benefits; if no excess exists, the additional minimum
liability is recorded against an offsetting intangible asset.
iii.
The changes effected for the discount rate in Chile GAAP and US
GAAP and their timing as described in (f) were also instituted
for post-retirement benefits.
The effects of accounting for post-retirement benefits under
US GAAP have been presented in paragraph (gg).
(h)
Investments in related companies
Under Chilean GAAP, until December 31, 2003 for all
investments accounted for by the equity method, the proportionate
net book value of the investee company was recorded as an
investment and the difference between the cost of investment and
the proportionate net book value of the investee was recorded
as goodwill. The goodwill is to be amortized to income over a
maximum period of twenty years. The investment account is adjusted
to recognize the investor’s share of the earnings or losses of the
investee determined under Chilean GAAP subsequent to the date of
the purchase. Technical Bulletin No. 72 issued by Chilean Association
of Accountants requires using fair value of acquired assets and
liabilities for the accounting for all acquisitions after January 1, 2004
and recording the differential between the cost and the fair value
as goodwill/negative goodwill as well as prospectively designating
all investments of 20% to 50% as having significant influence rather
than the 10% to 50% level previously defined as having significant
influence in Chilean GAAP. No retroactive changes or cumulative
effects of changes in accounting principles were required under
Technical Bulletin No. 72.
Under US GAAP, in accordance with Accounting Principles Board
Opinion No. 18, “the Equity Method for accounting for Investment in
Common Stock” (“APB No. 18”), the carrying amount of an investment
accounted for under the equity method is initially recorded at cost
and shown as a single amount in the balance sheet of the investor.
It is adjusted to recognize the investor’s share of the earnings or
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
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201
losses of the investee determined under US GAAP subsequent to the
date of investment. The investment reflects adjustments similar to
those made in preparing consolidated financial statements, including
adjustments to eliminate inter-company gains and losses and to
account for the differences, if any, between the investor’s cost and
the underlying equity in net assets of the investee at the date of
investment. The investment is also adjusted to reflect the investor’s
share of change in the investee capital accounts.
The Company’s equity share of the effect of the adjustments
from Chilean GAAP to U.S. GAAP of equity accounted investees
is included in paragraph (gg) below. The principal U.S. GAAP
adjustments affecting the Company’s equity investees are as
follows:
(I)
(II)
Reversal of capitalized foreign currency exchange differences
related to capitalized interest.
Reversal of complementary accounts (asset or liability) recorded
as a transitional provision as of January 1, 2000.
(III) Organizational costs deferred under Chilean GAAP that, under
U.S. GAAP, should have been included in income.
(IV) The recording of derivative instruments in accordance with
SFAS No. 133.
(V)
The deferred income tax effects of adjustments (I), (III) and
(IV).
(i) Goodwill and long-lived assets
(I)
Under Chilean GAAP, for acquisitions completed through
December 31, 2003 assets acquired and liabilities assumed are
recorded at their carrying value, and the excess of the purchase
price over the carrying value are recorded as goodwill. Circular
No. 1358, dated December 3, 1997 issued by the SVS, extended
the maximum amortization period of goodwill to 20 years
from the previous 10 years.
Under U.S. GAAP, assets acquired and liabilities assumed
are recorded at their estimated fair values, and the excess
of the purchase price over the estimated fair value of the net
identifiable assets and liabilities acquired are recorded as
goodwill. Up until December 31, 2001, the Company amortized
goodwill on a straight-line basis over the estimated useful
lives of the assets, ranging from 20 to 40 years. Goodwill
acquired after June 30, 2001 is not amortized. In accordance
with SFAS No. 142, the Company discontinued amortizing
goodwill on January 1, 2002. The effects of recording the
different amortization periods and reversing the amortization
of goodwill are included in paragraph (gg) below.
Technical Bulletin No. 72 issued by Chilean Association of
Accountants requires using fair value of acquired assets and
liabilities for the accounting for all acquisitions after January
1, 2004, and consequently after that date difference in
accounting treatment related to the allocation of purchase
consideration over assets acquired and liabilities assumed
between Chilean GAAP and US GAAP no longer exists.
(II) Under Chilean GAAP, the Company evaluated, during 2002,
the carrying amount of goodwill net of negative goodwill for
impairment. The measurement of the impairment loss was
based on the fair value of the investment which the Company
determined using a discounted cash flow approach and recent
comparable transactions in the market. In order to estimate
fair value, the Company made assumptions about future events
that were highly uncertain at the time of estimation. The
results of this analysis showed that the goodwill and negative
goodwill associated with investments in Argentina and Brazil
were impaired because estimated future discounted cash flows
were not sufficient to recover goodwill and negative goodwill.
During 2002, under Chilean GAAP the Company recorded a
net charge related to its investments in Central Costanera
S.A., Hidroeléctrica El Chocón S.A., Hidroinvest S.A., Lajas
Inversora S.A., Central Eléctrica Cachoeira Dourada S.A., Cía.
de Electricidade do Rio de Janeiro S.A., Coelce S.A., Distrelec
Inversora S.A., Edesur S.A., and Investluz S.A., in the amount
of ThCh$244,768,877 net of minority interest, to write-off all
amounts of goodwill and negative goodwill in a accordance
with the results of impairment analyses performed for these
companies.
In accordance with U.S. GAAP, the Company adopted SFAS No.
142 “Goodwill and Other Intangible Assets”, (SFAS No. 142)
as of January 1, 2002. SFAS 142 applies to all goodwill and
intangible assets acquired in a business combination. Under
the new standard, all goodwill, including that was acquired
before initial application of the standard and indefinite-lived
intangible assets are not amortized as of the effective date
but must be tested for impairment at least annually. The
transitional impairment test required by the standard was
performed and no adjustment for impairment was required.
However, based on subsequent testing of the Company’s
investments in Argentina and Brazil performed as of December
31, 2002, it was determined that these investments were
impaired.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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The following net effects are included in the net income (loss)
and shareholders’ equity reconciliation to U.S. GAAP under paragraph
(gg) below:
(b)
the adjustment to record the reversal of the impairment
recorded under Chilean GAAP during 2002, which is different
in amount from that in U.S. GAAP because of goodwill basis
differences,
(a)
reversal of goodwill amortization recorded under Chilean
GAAP
(c)
the adjustment to record the impairment under US GAAP from
investment in Argentina and Brazil in 2002
The adjustment as of each year are as follows:
As of December 31,
2002
ThCh$
2003
ThCh$
2004
ThCh$
Reversal of goodwill amortization
55,829,283
52,416,632
53,776,148
Reversal of impairment recorded under Chilean GAAP
Impairment of goodwill under US GAAP
Totals
468,363,520
(621,543,408)
—
—
—
—
(97,350,605)
52,416,632
53,776,148
(III) The company has considered the factors which could be
considered changes in circumstances which would trigger an
impairment review and, in accordance with SFAS No. 144,
“Accounting for the Impairment or Disposa1 of Long-Lived
Assets” beginning in 2002, the Company eva1uates the carrying
amount of property, plant and equipment and other long-lived
assets, in relation to the operating performance and future
undiscounted cash flows of the underlying business. These
standards require that an impairment loss be recognized in the
event that facts and circumstances indicate that the carrying
amount of an asset may not be fully recoverable. Impairment
is recorded based on an estimate of future discounted cash
flows, as compared to current carrying amounts. There were
no differences between impairment charges recorded under
Chilean GAAP and U.S. GAAP except for the reclassification of
impairment charges in 2002 related to the subsidiaries Centrais
Electrica Cachoeira Dourada S.A. and Inmobiliaria Manso de
Velasco Limitada from non-operating expenses as they were
reported under Chilean GAAP (see Note 23b), to operating
income under U.S. GAAP.
(j) Negative Goodwill
Under Chilean GAAP, until December 31, 2003 the excess of
the carrying value of the assets assumed in a business combination
over the purchase price is recorded as negative goodwill. Circular
No. 1358, dated December 3, 1997 issued by the SVS, extended the
maximum amortization period of negative goodwill to 20 years
from the previous 5 years. Technical Bulletin No. 72 issued by Chilean
Association of Accountants requires using fair value accounting for
all acquired assets and liabilities for all acquisitions after January
1, 2004
Under U.S. GAAP, the fair values of the assets acquired less
the fair values of the liabilities assumed in excess of the purchase
price is allocated proportionately to reduce the values assigned to
long-lived assets. If the allocation reduces the long-lived assets to
zero, the remainder of the excess is recorded as an extraordinary
gain to income.
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The effect of reduced depreciation expense on the long-
lived assets (for which no circumstances changed requiring an
impairment test under SFAS No. 144) to which negative goodwill
had been allocated under U.S. GAAP net against the reversals of
both amortization and write-offs of negative goodwill recorded in
Chile GAAP (over the appropriate useful lives as defined in the first
paragraph) are included in paragraph (gg) below.
(k) Capitalized interest and exchange differences
In accordance with Chilean GAAP, the Company has capitalized
both interest on debt directly related to property, plant and
equipment under construction and finance costs corresponding to
exchange differences generated by the loans associated with such
assets. The capitalization of interest costs associated with projects
under construction is optional when incurred on debt that is not
directly related to such projects. The Company has optioned for not
capitalizing indirect interest cost under Chilean GAAP.
Under U.S. GAAP, the capitalization of interest on qualifying
assets under construction is required, regardless of whether interest
is associated with debt directly related to a project to the extent that
interest cost would have been available if the project had not been
done. In addition, under U.S. GAAP, foreign translation exchange
differences may not be capitalized. The accounting differences
between Chilean and U.S. GAAP for financing costs and the related
depreciation expense are included in the reconciliation to U.S. GAAP
under paragraph (gg) below.
(l) Accumulated deficit during the development stage
Under Chilean GA AP, the losses incurred during the
development stage of subsidiary companies is recorded directly in
the parent company’s equity. Under U.S. GAAP, such costs must be
charged to income as incurred. As of December 31, 2004, no company
was classified as development stage company. For the years ended
December 31, 2002 and 2003, the effects of the adjustment are
included in paragraph (gg) below
(m) Minimum dividend
As required by the Chilean Companies Act, unless otherwise
decided by the unanimous vote of the holders of issued and subscribed
shares, the Company must distribute a cash dividend in an amount
equal to at least 30% of its net income for each year as determined
in accordance with Chilean GAAP, unless and except to the extent
the Company has unabsorbed prior year losses. Net income related
to the amortization of negative goodwill can only be distributed
as an additional dividend by the approval of the shareholders, and
accordingly, is not included in the calculation of the minimum dividend
to be distributed. Since the payment of the 30% dividend out of each
year’s income is required by Chilean law, an accrual was made in
the reconciliation in paragraph (gg) below to reflect the unrecorded
dividend liability for 2004.
(n) Capitalized general and administrative expenses
Until 1993, under Chile GAAP Endesa-Chile capitalized a portion
of its administrative and selling expenses as part of the cost of
construction in progress because a substantial portion of the efforts of
management were involved in the administration of major projects.
Under U.S. GAAP, general and administrative expenses are charged
to expense unless they can be directly identified with the supervision
of the construction of specific projects. Under Chilean GAAP the
Company has also capitalized other administrative expenses into
other long-term assets, which under US GAAP would not be allowed.
The effects of eliminating capitalized general and administrative
expenses and the related depreciation for U.S. GAAP purposes are
shown below under paragraph (gg).
(o)
Involuntary employee termination benefits
Under Chilean GAAP, the Argentine subsidiaries, Central
Costanera and Hidroelectricidad, recorded an accrual of certain
involuntary employee termination benefits related to the restructuring
plan announced in 1997. Since that date employees have continued to
be made redundant pursuant to this plan. Additionally, during 2003
the Company increased the amount of the accrual recorded under
Chilean GAAP. In accordance with U.S. GAAP, at that time in order to
recognize a liability at the balance sheet date for the cost to terminate
employees involuntarily, there must be a plan that specifically
includes notification to employees prior to the balance sheet date.
As of December 31, 2002, 2003 and 2004, this requirement had
not been met.
The net effect of eliminating the accrued liability recognized
under Chile GAAP is presented in paragraph (gg) below.
(p) Adjustment in selling price of investment
Under Chilean GAAP, pursuant to the share transaction
contract entered into in 1995 between Endesa-Chile and Endesa
Overseas Co. with Enersis Intemational Limited, Chilectra S.A. and
Chilectra IntemationaI Limited, Endesa Argentina recognized income
related to an adjustment of the share purchase price. Under U.S.
GAAP, the contingent price adjustment would be considered a part
of the purchase price, and would therefore be offset against the
amount of goodwill that was originally determined. As described in
paragraph (i), the Company determined goodwill amounts recorded
in investments in Argentina were impaired as of December 31,
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2002, thus the adjustment in selling price of investment is a basis
difference between Chilean and U.S. GAAP that was eliminated after
the impairment charge recorded in 2002.
•
Income and expense accounts are translated at average
rates of exchange between the US dollar and local currency.
The effects of the adjustments to conform to U.S. GAAP are
included under paragraph (gg) below.
• The effects of any exchange rate fluctuations between
the local currency and the US dollar are included in the results of
operations for the period.
(q) Elimination of capitalized interest in Brazil
Until 1999, under Chilean GAAP, the Company capitalized
interest to property, plant and equipment as a result of the creation
of a legal reserve specifically permitted in Brazil for the electricity
industry by crediting interest expense. Under U.S. GAAP, interest
capitalized must be based on actual interest incurred, and as such
the effects of the elimination of the interest capitalized to property,
plant and equipment and the effects on depreciation expense are
included in paragraph (gg) below.
(r) Organizational and start-up costs
Certain costs related to the organization and creation of
certain subsidiaries of the Company are deferred and capitalized
under Chilean GAAP and amortized.
Under U.S. GAAP, such organizational and start-up costs may
not be deferred and must be included in income as incurred.
The effects of the difference are included in paragraph (gg)
below.
Under BT 64, the investment in the foreign subsidiary is price-
level restated, the effects of which are reflected in income, while the
effects of the foreign exchange gains or losses between the Chilean
Peso and the US dollar on the foreign investment measured in US
dollars, are reflected in equity in the account “Cumulative Translation
Adjustment”.
The amount of foreign exchange gain (loss) included in
income that is attributable to operations in unstable countries
because these amounts have been remeasured into US dollars was
ThCh$186,392,592, ThCh$(69,199,468) and ThCh$(56,947,613) for
the years ended December 31, 2002, 2003 and 2004, respectively
(See Note 23).
Company’s Management believes that, foreign currency
translation procedures described above are part of the comprehensive
basis of preparation of price-level adjusted financial statements
required by Chilean GAAP. Inclusion of inflation and translation
effects in the financial statements is considered appropriate under
the inflationary conditions that have historically affected the Chilean
economy, and accordingly, are not eliminated in the reconciliation
to U.S. GAAP as permitted by Form 20-F.
(s) Translation of Financial Statements of Investments
(t) Derivative instruments
Outside of Chile
Under Chilean GAAP, in accordance with Technical Bulletin
64 (“B.T. 64”) the financial statements of foreign subsidiaries
that operate in countries exposed to significant risks (“unstable”
countries), and that are not considered to be an extension of the
parent company’s operations, are remeasured into US dollars.
The Company’s foreign subsidiaries in Argentina, Perú, Brazil, and
Colombia all meet the criteria of foreign subsidiaries that operate
in countries exposed to significant risks under BT 64, and are
remeasured into US dollars. The Company has remeasured its foreign
subsidiaries into US dollars under this requirement as follows:
• Monetary assets and liabilities are translated at year-end
rates of exchange between the US dollar and the local currency.
• All non-monetary assets and liabilities and shareholder’s
equity are translated at historical rates of exchange between the US
dollar and the local currency.
The Company engages in derivative activity for hedging
purposes. These derivatives are considered accounting hedges
under Chilean GAAP. Under Chilean GAAP the accounting treatment
of hedging activity is similar to the accounting treatment of fair value
hedges and cash flow hedges under SFAS 133. The documentation and
hedge effectiveness requirements under Chilean GAAP though are
not as burdensome as under SFAS 133. Under SFAS 133 to qualify for
hedge accounting strict requirements need to be met, including hedge
documentation and effectiveness tests. The Company does not have
the documentation and hedge effectiveness requirements to qualify
for hedge accounting. Therefore, all derivative instruments have
been accounted at fair value with changes in fair value recognized
in earnings for US GAAP purposes.
The Company has designated under Chilean GAAP certain non-
derivative financial instruments as hedges of the foreign currency
exposure of net investments in foreign operations. The gain or loss on
the non-derivative financial instrument that is designated as a hedge
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is reported as a translation adjustment to the extent it is effective as
a hedge, any ineffectiveness is recorded in earnings. This accounting
treatment is consistent with SFAS 133.
The sales of subsidiaries Infraestruc tura 2000 S.A.
and Canutillar Plan did not result in any US GAAP difference
adjustment.
SFAS 133 also requires that certain embedded derivatives be
separated and reported on the balance sheet at fair value and be
subject to the same rules as other derivative instruments. Current
Chilean accounting rules do not consider the existence of derivative
instruments embedded in other contracts and therefore they are not
reflected in the financial statements under Chilean GAAP.
The effects of the adjustment with respect to financial
derivatives, commodity derivatives, and embedded derivatives for
the years ended December 31, 2002, 2003 and 2004 is included in
the net income and shareholders’ equity reconciliation to US GAAP
under paragraph (gg) below.
(w) Deferred income
During 2000, fiber optic cable was contributed to the Company
in return for granting the contributing company access to the
fiber optic network after installation in the Company’s electricity
distribution system. Under Chilean GAAP, the contributed assets
were recorded at their fair market value, with a corresponding credit
recognized as income in 2000. Under U.S. GAAP, the amount was
deferred and amortize over the life of the related service contract.
This adjustment reverses the gain under Chile GAAP and records the
amortization of the deferred income recognized under U.S. GAAP.
The effect on shareholders’ equity and net income for the years
(u) Fair value of long-term debt assumed
presented is included in (gg) below.
As discussed in paragraph (i), under Chilean GAAP, assets
acquired and liabilities assumed are recorded at their carrying
value, and the excess of the purchased price over the carrying value
are recorded as goodwill. Under U.S. GAAP, assets acquired and
liabilities assumed are recorded at their estimated fair values, and
the excess of the purchased price over the estimated fair value of
the net identifiable assets and liabilities acquired are recorded as
goodwill. As part of the purchase of the majority ownership interest
in Endesa-Chile, under U.S. GAAP, the cost of the purchase price would
have been allocated to the fair value of long-term debt.
The effect on shareholder’s equity and net income for the years
presented is included in paragraph (gg) below.
(v) Effects on US GAAP of sale of subsidiary Río Maipo
The adjustment of the net gain obtained from the sale of the
subsidiary Compañía Eléctrica del Río Maipo S.A results from the
reversal of the accumulated US GAAP adjustment at December 31,
2002. As explained in Note 11d) this subsidiary was sold in April 2003.
The reversal of these adjustment increased by ThCh$501,587 the gain
obtained from the sale of this subsidiary.
The operating income generated by Río Maipo until
disposal date amounted to ThCh$2,828,342 (sales amounted to
ThCh$14,824,196 less cost of sales amounted to ThCh$11,087,968
and administrative and selling expenses amounted to ThCh$907,886)
was reclassified from non-operating income to operating income in
accordance with US GAAP (see Note 36 II (k)).
(x) Regulated assets and deferred costs
The electricity sector in Chile and other countries of operation in
Latin America is regulated pursuant to the Chilean and other country
electricity laws. Most of the Company’s sales are subject to node
price regulation, which is designed to ensure an adequate supply of
energy at reasonable, determined prices, which considers a variety of
factors. The marginal cost pricing model is not solely based upon costs
incurred by the Company, and as a result, the requirements of U.S.
GAAP under SFAS No.71, “Accounting for the Effects of Certain Types
of Regulation”, related to a businesses whose rates are regulated are
not applicable to the Company’s financial statements, except for the
Company’s operations in Brazil as described below.
As a result of changes in Brazilian Electricity Laws and
Regulations, the Company’s distribution subsidiaries in Brazil,
Companhia de Electricidad do Rio de Janeiro (Cerj) and Companhia
Energética do Ceará (Coelce), are subject to the provisions of SFAS
No. 71 beginning on January 1, 2001. With the new regulations issued
by the National Agency of Electric Energy (ANEEL), the rate-setting
structure in Brazil is now designed to provide recovery for allowable
costs incurred, which will be recovered through future increases
in energy tariffs in order to recover losses experienced during the
period of Brazilian Federal Government mandated energy rationing
from June 1, 2001 to December 31, 2001. The Company estimates
remaining costs will be recovered over a period of three years, from
the balance date.
Accordingly, the Company capitalizes incurred costs as deferred
regulatory assets when there is a probable expectation that future
revenue equal to the costs incurred will be billed and collected as a
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direct result of the inclusion of the costs in an increased rate set by
the regulator. The deferred regulatory asset is eliminated when the
Company collects the related costs through billings to customers.
ANEEL perform a rate review on an annual basis. If ANEEL excludes all
or part of a cost from recovery, that portion of the deferred regulatory
assets is impaired and is accordingly reduced to the extent of the
excluded cost. The Company has recorded deferred regulatory assets,
which it expects to pass on to its customers in accordance with and
subject to regulatory provisions.
The regulations also included certain VPA costs, which each
distribution company is permitted to defer and pass on to their
customers using future rate adjustments. VPA costs are limited by
concession contracts to the cost of purchased power and certain other
costs and taxes. Due to uncertainty in the Brazilian economy, ANEEL
delayed the approval of such VPA rate increases. An Executive Order
in October 2001 created a tracking account mechanism, in order to
calculate the variation in the VPA costs for future rate adjustment
calculation purposes. The Company has not recognized any regulatory
assets for VPA costs incurred prior to 2001, because costs incurred
prior to January 1, 2001, are not recoverable through the tracking
account.
Under Chilean GAAP, the Company recognized revenue and
deferred costs related to the regulated assets. Under U.S. GAAP,
in accordance with Emerging Issues Taskforce (EITF) No. 92-7,
“Accounting by Rate Regulated Utilities for the Effects of Certain
Alternate Revenue Programs”, revenue amounts not expected to be
collected within 24 months, have been deferred.
The effect of deferring revenues expected to be collected after
two years is included in (gg) below.
(y) Reorganization of subsidiaries
a greater depreciation expense to be recorded under US GAAP over
the remaining estimated useful life of 20 years.
The effect of this adjustment is included in the net income and
shareholders’ equity reconciliation to US GAAP under paragraph
(gg) below.
(z) Assets held for sale
Under Chilean GAAP the Company records divestitures of
investments or assets in the year in which they occur. Under U.S.
GAAP, in accordance with SFAS No. 144, long-lived assets for which
there is a plan to sell the assets within the following year, shall be
disclosed separately from the Company’s other assets, provided all
the criteria are met. Additionally, long-lived assets classified as held
for sale must be measured at the lower of their carrying amount or
fair value less cost to sell. Long-lived assets shall not be depreciated
while they are classified as held for sale, while interest and other
expenses attributable to the liabilities of a disposal group classified
as held for sale shall continue to be accrued.
The Company’s Board of Directors approved a plan to sell a
number of the Company’s assets during October 2002. The following
assets to be sold meet the definition of, reporting units or long-lived
assets held for sale:
• Compañía Eléctrica del Río Maipo S.A.
• Central Canutillar power plant
• Gas Atacama transmission lines
• CELTA transmission lines
• Infraestructura 2000 S.A.
This adjustment corresponds to the reorganization of the
Company’s subsidiaries Central Costanera S.A. and Central Buenos
Aires (CBA) during 2001, in which Central Costanera acquired the
minority interest in CBA from third parties and exchanged shares with
Endesa Argentina S.A. Under Chilean GAAP, the Company recorded
the transactions under the pooling method, using the book values
of the net assets acquired under merger accounting.
The Company evaluated the carrying values of all assets held
for sale, recording a loss to the extent that one of the assets’ fair
values less cost to sell was lower than the carrying value of those
assets. Additionally, the Company ceased recording depreciation
expense once the assets met the qualification criteria of held for
sale, which occurred over various dates from October to December
2002.
Under US GAAP the exchange of shares between entities under
common control is recorded at book values. However, to the extent
that shares in CBA were acquired from third parties, the identifiable
assets acquired and liabilities assumed are recorded at fair value
using purchase accounting together with the shares issued by the
subsidiary Central Costanera S.A. The difference in property, plant
and equipment basis between Chilean GAAP and US GAAP results in
During 2003, all of the designated assets had been sold
therefore eliminating this difference in 2003.
The effect of these adjustments is included in the net income
and shareholders’ equity reconciliation to U.S. GAAP under paragraph
(gg) below.
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(aa) Elimination of discontinued operations
Under Chilean GAAP, no restatement to the financial statement
information presented in previous years is required after a divestiture
has occurred. Under US GAAP, in accordance with SFAS No. 144, the
discontinued operations of a component must be retroactively
separated from the continuing operations of an entity, when the
operations and cash flows of a component which will be eliminated
from the ongoing operations of an entity as a result of a disposal
transaction will not have any significant continuing involvement in
the operations of a component after the disposal transaction.
The Company evaluated whether any of the assets held for
sale met either criteria, noting that the transmission lines and power
plant are not components, as they are included as a part of larger
cash flow generating groups, and the operations of these assets
cannot be separated from their respective groups. Additionally,
Endesa-Chile plans to continue generating revenues from Canutillar
through a purchase power agreement, management agreement,
and a transmission leasing arrangement with the future buyer.
Infraestructura 2000 S.A. met the conditions for being classified as a
discontinued operation, because it has distinct and separable financial
results from operations and cash flows. As a result of the disposal
the results of operations of the reporting unit have been eliminated
from the ongoing operations of Enersis, as Enersis will not have any
continuing involvement in the operations of Infraestructura 2000
S.A. after its was sold. The Rio Maipo facility was classified as “held
for sale” on December 31, 2002. In April, 2003, the Company sold
the facility. In accordance with SFAS 144, the Company determined
that the Rio Maipo did not meet the criteria to be classified as a
discontinued operations as Enersis will have a significant continuing
involvement through continuing sales to Rio Maipo’ though its
subsidiary Endesa - Chile.
The effect of reclassifying discontinued operations is included
in the net income reconciliation to U.S. GAAP under paragraph (gg)
below.
(bb) Effects of minority interest on the U.S. GAAP
adjustments
The net income and shareholders’ equity under Chilean
GAAP is adjusted in the U.S. GAAP footnote for the impact of the
U.S. GAAP reconciling items on the allocation of income and loss
to minority interests. The sum of this adjustment and the minority
interest reflected in our consolidated income statement and balance
sheet for each period presented under Chilean GAAP represents the
allocation of our results and shareholders’ equity to our minority
shareholders under U.S. GAAP.
The effect of this adjustment is included in net income and
shareholders’ equity reconciliation to US GAAP under paragraph
(gg) below.
(cc) Extraordinary Items
In 2002, the Company incurred a Chilean GAAP extraordinary
charge in accordance with Decree No. 1,949 of the Republic of
Colombia for a tax that will be used for Colombia’s democratic
security, as disclosed in Note 26 Extraordinary Items.
Under U.S. GAAP, this charge is classified as income tax expense
in accordance with SFAS 109, Accounting for Income Taxes (SFAS 109),
as discussed in Note 36 II k) Reclassification to U.S. GAAP.
(dd) Negative Goodwill CERJ
In January 2003, CERJ, one of our Brazilian subsidiaries
approved a capital increase as a result of which our ownership interest
in CERJ increased, as certain minority shareholders, including certain
wholly owned subsidiaries of Endesa-Spain, Enersis ultimate parent
company did not participate.
Under Chile GAAP in accordance with BT No 42 and SVS Circular
368 the company recognized the value of the difference between the
amount contributed and the underlying net book in the company
was as negative goodwill, to be amortized over a 20 year period.
In accordance with the appropriate guidance, Enersis is allowed to
fully amortize into income the amount of any negative goodwill, if
during the first year subsequent to the capital increase the amount
of the losses incurred by the subsidiary is in excess the amount of
negative goodwill. During 2003, CERJ incurred losses consequently
Enersis fully amortized into income the negative goodwill originally
recognized.
Under US GAAP, the transaction would be considered a
transaction between entities under common control in which the
minority interest did not participate, consequently similar to the
guidance in FTB No. 85-5, Issues Relating to Accounting for Business
Combinations the transaction is accounted for as a capital transaction.
Consequently the amount of the negative goodwill amortized
into income in Chile GAAP is recorded directly as an increase to
consolidated equity under US GAAP.
The effects in net income of the US GAAP adjustment are
presented in note (gg) below.
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(ee) Extinguishment of debt
In March 2003, certain bondholders were granted an option to
exchange between November 1, and 15, 2003 their bonds in exchange
for shares of the Company at a fixed price of Ch$60.4202. Under
Chile GAAP the transaction was accounted for as an exchange of
debt for equity with the difference between the carrying amount of
the debt and the strike price of the conversion recognized directly in
equity a share premium.
Under US GAAP the transaction should be recognized as an
extinguishment of debt in accordance with APB No. 14, using as
reacquisition price of the extinguished debt the value of the common
issued or the value of the debt whichever is more clearly evident, as
Enersis stock is publicly trade the fair value of the shares is being
considered to be more clearly evident. The average conversion
price during November 2003, the conversion period was Ch$78 per
share.
At the same time the standard requires the Company to
capitalize the new costs arising as the result of additional liabilities
incurred, such as the activation of a new generation facility, and
subsequently allocate that asset retirement cost to expense over the
life of the plant based on the useful life of the plant. The accumulated
effect of adopting SFAS 143 as of January 1, 2003 is presented in
paragraph (gg) below, net of taxes of ThCh$287,502 and minority
interest of ThCh$154,377. At December 31, 2003 and 2004, the
adjustment to US GAAP income from continuing operations represents
the accreted interest expense and depreciation of the costs capitalized
for the asset retirement obligations.
In Peru, where we have eight hydroelectric plants and one
thermoelectric plant, existing legislation includes the requirement
for entities with electrical assets to conduct retirement activities
when operations cease. In Chile, under certain concession decrees
governing four distribution lines, we are similarly required to conduct
retirement activities upon cessation of operations.
The effects in net income and shareholders’ equity of the US
The effects of this U.S. GAAP adjustment on net income and
GAAP adjustment are presented in note (gg) below.
shareholders’ equity are presented in note (gg) below.
At December 31, 2003 and 2004, the adjustment to US GAAP
income from continuing operations represents the accreted interest
expense and depreciation of the costs capitalized for the asset
retirement obligations.
(ff) Asset retirement obligations
Under Chilean GAAP, there is no requirement to record
obligations associated with the retirement of tangible long-lived
assets. Under U.S. GAAP, the Company adopted SFAS No. 143,
“Accounting for Asset Retirement Obligations” effective January 1,
2003. Previously, the Company had not been recognizing amounts
related to asset retirement obligations under U.S. GAAP.
This standard requires the Company to record the fair value of
the legal obligation it has to make certain environmental restorations
upon closure of its facilities. The fair value of the liability is estimated
by discounting the future estimated expenditures related to the
restoration. The Company then measures changes in the liability due
to passage of time by applying an interest method of allocation to the
amount of the liability at the beginning of the period. The interest rate
used to measure that change is the credit-adjusted risk-free rate that
existed when the liability, or portion thereof, was initially measured.
That amount is recognized as an increase in the carrying amount of
the liability and the expense is classified as an operating item in the
statement of income, referred to as accretion expense.
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(gg) Effect of conforming to U.S. GAAP
The reconciliation of reported net income required to conform with U.S. GAAP is as follows:
As of December 31,
Net income (loss) in accordance with Chilean GAAP
Reversal of amortization of revaluation of property, plant and equipment (paragraph b)
Depreciation of property, plant and equipment and difference in fixed assets value
at acquisition date (paragraph c)
Amortization of intangibles (paragraph d)
Deferred income taxes (paragraph e)
Pension and post-retirement benefits (paragraph g)
Investments in related companies (paragraph h)
Amortization and impairment of goodwill (paragraph i)
Amortization of negative goodwill (paragraph j)
Capitalized interest (paragraph k)
Depreciation capitalized interest (paragraph k)
Difference foreign exchange capitalized (paragraph k)
Depreciation difference foreign exchange capitalized (paragraph k)
Accumulated deficit during the development stage (paragraph l)
Capitalized general and administrative expenses (paragraph n)
Involuntary employee termination benefits (paragraph o)
Adjustment in selling price of investment (paragraph p)
Elimination of amortization of capitalized legal reserve (paragraph q)
Amortization of organizational and start-up costs (paragraph r)
Derivative instruments operating income (paragraph t)
Derivative instruments non-operating income (paragraph t)
Fair value of long-term debt assumed (paragraph u)
Sale of subsidiaries (paragraph v)
Deferred income (paragraph w)
Regulated assets (paragraph x)
Reorganization of subsidiaries (paragraph y)
Asset held for sale (paragraph z)
Reclassification of discontinued operations (paragraph aa)
Effects of minority interest on the U.S. GAAP adjustments (paragraph bb)
Deferred tax effects on the U.S. GAAP adjustments
Extinguishment of debt (paragraph ee)
Reversal amortization of negative goodwill Cerj. (paragraph dd)
Staff severance indemnities (paragraph f)
Asset retirement cost - (paragraph ff)
Asset retirement obligations - liabilities (paragraph ff)
2002
ThCh$
(231,635,207)
3,454,430
(5,647,997)
126,135
(21,894,635)
23,945,360
21,596,283
(97,350,605)
(85,215,878)
(26,166,717)
2,515,596
(10,285,379)
260,422
(6,036,038)
2,027,459
(359,324)
4,649,632
935,211
5,554,202
(53,175,173)
(27,653,343)
(94,786)
—
284,517
2003
ThCh$
12,779,560
1,653,213
(2,465,204)
126,134
9,411,217
12,152,640
28,083,920
52,416,632
(13,665,702)
10,623,041
(3,088,013)
30,001,749
71,020
(1,335,234)
(2,308,448)
12,173
—
533,782
3,573,964
(167,791,585)
24,953,033
(66,299)
501,587
122,715
(53,044,069)
58,955,925
(331,053)
(918,516)
(153,856)
132,128,313
80,774,318
-—
—
—
—
—
(270,848)
918,516
(303,472)
22,316,179
5,698,558
(18,146,247)
(35,380,018)
178,745
(1,489)
(44,474)
2004
ThCh$
44,307,596
1,848,514
(2,196,372)
1,009,079
11,923,907
(5,423,472)
1,464
53,776,148
1,197,823
7,893,086
(2,167,296)
(5,844,604)
247,149
—
2,791,871
(1,673)
—
490,048
462,821
(6,727,187)
15,798,123
(138,246)
—
229,506
11,398,114
(248,043)
—
—
22,098,316
(671,673)
—
—
(178,745)
535,211
(637,297)
Net income (loss) in accordance with U.S. GAAP before effect of discontinued operations, and
cumulative effect of change in accounting principle
(341,710,698)
30,217,270
151,774,169
Income from discontinued operations net of taxes and minority interest (paragraph aa)
170,939
70,835
—
Net income (loss) in accordance with U.S. GAAP before effect of cumulative effect of change in
accounting principle
Cumulative effect of change in accounting principle, net of the tax and minority interest
Net income (loss) in accordance with U.S. GAAP
(341,539,759)
—
(341,539,759)
30,288,105
(287,502)
30,000,603
151,774,169
—
151,774,169
Other comprehensive income (loss):
Cumulative translation adjustment determined under Chilean GAAP net of minority interest
Cumulative translation adjustment related to U.S GAAP adjustments net of minority interest
Comprehensive income (loss) in accordance with U.S.GAAP
21,322,955
(12,582,928)
(332,799,732)
(74,845,570)
52,450,844
7,605,877
(96,275,517)
12,452,098
67,950,750
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The reconciliation to conform shareholders’ equity amounts to U.S. GAAP is as follows:
Shareholders’ equity in accordance with Chilean GAAP
Reversal of revaluation of property, plant and equipment net of accumulated amortization
revaluation of property, plant and equipment (paragraph b)
Depreciation of property, plant and equipment and difference in fixed asset
value at acquisition date (paragraph c)
Intangibles (paragraph d)
Deferred income taxes (paragraph e)
Pension and post-retirement benefits liabilities long term (paragraph g)
Investments in related companies (paragraph h and paragraph z)
Goodwill (paragraph i)
Goodwill gross amount (paragraph i)
Negative goodwill (paragraph j)
Capitalized interest (paragraph k)
Exchange diference (paragraph k)
Minimum dividend (paragraph m)
Capitalized general and administrative expenses (paragraph n)
Reversal of accrual of certain involuntary employee termination benefits (paragraph o)
Elimination of capitalized legal reserve (paragraph q)
Amortization organizational and start-up costs (paragraph r)
Derivative instruments (paragraph t)
Fair value of long-term debt assumed (paragraph u)
Reorganization of subsidiaries (paragraph y)
Deferred income (paragraph w)
Regulated assets (paragraph x)
Effects of minority interest on the U.S. GAAP adjustments (paragraph bb)
Deferred tax effects on the U.S. GAAP adjustments
Staff severance indemnities (paragraph f)
Asset retirement cost (paragraph ff)
Asset retirement obligations - liabilities (paragraph ff)
Shareholders’ equity in accordance with U.S. GAAP
As of December 31,
2003
ThCh$
2004
ThCh$
2,612,101,688
2,559,553,142
(12,464,109)
(10,686,076)
(8,017,038)
(10,845,548)
(1,009,079)
—
(247,951,919)
(302,433,018)
(13,009,204)
(17,437,701)
31,714,485
29,443,314
303,693,155
353,200,284
4,520,451
82,154,857
(405,222,235)
(372,929,343)
61,575,186
62,124,455
(14,808,381)
(19,849,732)
—
(8,160,208)
(26,953,282)
(23,175,518)
90,688
81,380
(7,395,646)
(6,282,920)
(28,341,554)
(14,628,965)
(25,541,256)
(16,495,956)
1,244,204
4,870,378
(2,788,439)
(23,290,784)
1,105,960
4,212,272
(2,324,155)
(9,931,912)
227,074,831
223,852,306
145,536,506
134,534,591
178,745
64,263
(537,670)
—
598,306
(1,135,913)
2,575,333,984
2,634,543,902
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The changes in shareholders’ equity in U.S. GAAP as of each year-end are as follows:
Shareholders equity in accordance with U.S. GAAP - January 1
1,199,433,654
879,725,912
2,575,333,984
2002
ThCh$
2003
ThCh$
2004
ThCh$
Minimum dividend payable (paragraph m)
Negative goodwill Cerj (paragraph dd)
Extinguishment of debt (paragraph ee)
Cumulative translation adjustment
Capital increase
13,091,990
—
(8,160,208)
—
—
35,380,018
18,146,247
—
—
8,740,027
(22,394,726)
(83,823,419)
—
1,634,475,930
(580,624)
Net income (loss) in accordance with U.S. GAAP for the year
(341,539,759)
30,000,603
151,774,169
Shareholders equity in accordance with U.S.GAAP - December 31
879,725,912
2,575,333,984
2,634,543,902
II. Additional disclosure requirements:
(a) Goodwill and negative goodwill
The following is an analysis of goodwill and negative goodwill, determined on Chilean GAAP basis, as of December 31, 2003 and
2004, respectively:
Goodwill
Less: accumulated amortization
Goodwill, net
Negative goodwill
Less: accumulated amortization
Negative goodwill, net
Amortization expense under Chile GAAP is disclosed in Note 13.
(b) Basic and diluted earnings per share:
Chilean GAAP (loss) earnings per share
U.S. GAAP (loss) earnings per share:
U.S. GAAP (loss) earnings per share before effect of discontinued operations and
cumulative effect of change in accounting principle
Discontinued operations (net of tax)
U.S. GAAP (loss) earnings per share before effect of
cumulative effect of change in accounting principle
Cumulative effect of change in accounting principle (net of tax)
Basic and diluted U.S. GAAP (loss) earnings per share
Total number of common outstanding shares at December 31,
Weighted average number of common shares outstanding (000’s)
As of December 31,
2003
ThCh$
2004
ThCh$
1,724,462,233
1,711,291,508
(924,555,085)
(977,756,405)
799,907,148
733,535,103
(457,889,564)
(450,516,782)
376,674,066
393,780,968
(81,215,498)
(56,735,814)
For the year ended December 31,
2002
Ch$
(27.94 )
2003
Ch$
0.62
2004
Ch$
1.36
(41.21)
0.02
(41.19)
—
(41.19)
1.48
0.00
1.48
(0.01 )
1.47
4.65
—
4.65
—
4.65
8,291,020
8,291,020
32,651,166
20,471,093
32,651,166
32,651,166
(1)
The earnings per share figures for both U.S. GAAP and Chilean GAAP purposes have been calculated by dividing the respective earnings (loss) amounts in accordance with U.S. GAAP and Chilean
GAAP, respectively, by the weighted average number of common shares outstanding during the year. The Company has not issued convertible debt or contingent equity securities. Consequently,
there are no potentially dilutive effects on the earnings per share of the Company.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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(c) Income taxes:
The provision (benefit) for income taxes charged to the results of operations determined in accordance with U.S. GAAP is as
follows:
2002
Income tax provision under Chilean GAAP
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
Current income taxes as determined under Chilean GAAP
(13,760,757)
64,313
(13,107,651)
(2,694,635)
(46,843,142)
(76,341,872)
Deferred income taxes as determined under Chilean GAAP
(3,328,058)
35,277,074
(31,391,274)
6,086,915
1,353,131
7,997,788
Total income tax provision under Chilean GAAP
(17,088,815)
35,341,387
(44,498,925)
3,392,280
(45,490,011)
(68,344,084)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
(2,379,812)
31,498,902
(22,246,395)
(25,156,270)
(3,611,060)
(21,894,635)
Deferred tax effect of adjustments to U.S. GAAP
13,683,708
(14,272,973)
22,346,301
21,081,175
37,936,107
80,774,318
Total U.S. GAAP adjustments:
11,303,896
17,225,929
99,906
(4,075,095)
34,325,047
58,879,683
US GAAP reclassifications (1)
303,892
6,308,893
(23,164,381)
(16,551,596)
Total Income tax provision under U.S. GAAP
(5,481,027)
52,567,316
(44,399,019)
5,626,078
(34,329,345)
(26,015,997)
2003
Income tax provision under Chilean GAAP
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
Current income taxes as determined under Chilean GAAP
(29,057,652)
(15,015,433)
(9,161,547)
(50,037,373)
(103,272,005)
Deferred income taxes as determined under Chilean GAAP
24,329,322
21,113,119
(16,018,315)
30,618,264
619,631
60,662,021
Total income tax provision under Chilean GAAP
(4,728,330)
21,113,119
(31,033,748)
21,456,717
(49,417,742)
(42,609,984)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
5,839,435
(1,937,830)
5,456,339
53,272
9,411,216
Deferred tax effect of adjustments to U.S. GAAP
(4,784,364)
59,296,937
(19,007,947)
(26,947,779)
(2,858,289)
5,698,558
U.S. GAAP reclassifications (1)
Total U.S. GAAP adjustments:
99,979
5,107,623
5,207,602
1,155,050
57,359,107
(13,551,608)
(21,786,884)
(2,858,289)
20,317,376
Total Income tax provision under U.S. GAAP
(3,573,280)
78,472,226
(44,585,356)
(330,167)
(52,276,031)
(22,292,608)
2004
Income tax provision under Chilean GAAP
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
Current income taxes as determined under Chilean GAAP
(991,273)
(1,281,754)
(17,736,313)
(5,115,035)
(66,498,093)
(91,622,468)
Deferred income taxes as determined under Chilean GAAP
7,287,617
(21,829,716)
(26,065,776)
(2,314,880)
(2,695,984)
(45,618,739)
Total income tax provision under Chilean GAAP
6,296,344
(23,111,470)
(43,802,089)
(7,429,915)
(69,194,077)
(137,241,207)
U.S. GAAP adjustments:
Deferred tax effect of applying SFAS No. 109
1,452,593
8,338,704
2,660,478
(527,868)
11,923,907
Deferred tax effect of adjustments to U.S. GAAP
(314,014)
1,484,975
2,857,880
(3,308,529)
(1,391,985)
(671,673)
U.S. GAAP reclassifications (1)
Total U.S. GAAP adjustments:
1,138,579
9,823,679
5,518,358
(3,836,397)
(3,238,432)
9,405,787
(1,846,447)
(1,846,447)
Total Income tax provision under U.S. GAAP
7,434,923
(13,287,791)
(38,283,731)
(11,266,312)
(72,432,509)
(127,835,420)
(1) Certain tax-related expenses under Chilean GAAP are classified as non-operating, but under US GAAP would be classified as income taxes.
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Deferred tax assets (liabilities) as of balance sheet dates are summarized s follows:
2003
2004
SFAS No. 109
Applied to
Chilean
GAAP
Balances
SFAS No.
109 applied
to U.S. GAAP
Adjustments
Total
Deferred
Taxes under
SFAS No. 109
SFAS No. 109
Applied to
Chilean
GAAP
Balances
SFAS No.
109 applied
to U.S. GAAP
Adjustments
Total
Deferred
Taxes under
SFAS No. 109
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Deferred income tax assets:
Property, plant and equipment
3,159,631
138,722,121
141,881,752
2,893,469
144,917,275
147,810,744
Regulated assets and related deferred cost
(conpanies in Brazil)
Negative goodwill
Allowance for doubtful accounts
Actuarial deficit (companies in Brazil)
Deferred income
Provision real estate projects
Derivative contracts
Vacation accrual
Post retirement benefits
Tax loss carryforwards (1)
Contingencies
Salaries for construction-in progress
—
—
29,156,973
12,070,233
7,025,896
2,944,849
312,837
789,056
7,918,866
9,753,529
—
—
948,068
—
4,388,443
—
7,918,866
9,753,529
29,156,973
12,070,233
7,973,964
2,944,849
4,701,280
789,056
—
—
28,960,469
12,028,415
2,470,957
2,528,523
1,615,743
902,749
3,376,851
3,376,851
—
—
—
—
—
3,290,991
—
—
28,960,469
12,028,415
2,470,957
2,528,523
4,906,734
902,749
—
5,553,836
5,553,836
—
5,928,818
5,928,818
131,104,976
54,237,427
3,899,439
—
—
131,104,976
124,656,238
54,237,427
1,613,700
5,513,139
51,978,843
3,632,328
—
—
—
124,656,238
51,978,843
3,632,328
Valuation allowance
(2,685,345)
(1,052,390)
(3,737,735)
(2,935,126)
(2,919,991)
(5,855,117)
Others
Provision for employee benefits
10,027,102
4,360,516
139,381
10,166,483
—
4,360,516
6,502,226
4,168,216
1,579,806
8,082,032
—
4,168,216
Total deferred income tax assets
256,403,590
167,985,554
424,389,144
239,403,050
156,173,750
395,576,800
Deferred income tax liabilities:
Property, plant and equipment (2)
364,093,484
37,854,634
401,948,118
386,681,353
105,043,048
491,724,401
Severance indemnities
Regulated assets
Finance costs
Derivative contracts
Bond discount
Cost of studies
Imputed interest on construction
With-holdings
Materials used
Capitalized expenses
Capitalized interest
Post retirement benefits
Others
1,953,906
15,837,943
10,904,732
989,222
1,901,990
8,180,400
4,664,007
7,113
973,913
637,484
30,387
1,984,293
—
—
319,064
—
—
—
—
—
—
15,837,943
10,904,732
1,308,286
1,901,990
8,180,400
4,664,007
7,113
973,913
637,484
1,886,652
14,658,884
12,982,334
—
1,836,701
8,107,213
4,293,140
—
895,914
556,006
—
—
—
—
—
—
—
—
—
—
1,886,652
14,658,884
12,982,334
—
1,836,701
8,107,213
4,293,140
—
895,914
556,006
1,449,633
19,948,860
21,398,493
1,899,692
21,111,245
23,010,937
—
1,358,349
9,078,080
792,387
1,358,349
9,870,467
—
—
—
6,792,158
261,058
7,053,216
Total deferred income tax liabilities
420,671,907
60,303,681
480,975,588
440,590,047
126,415,351
567,005,398
Net deferred assets (liabilities)
(164,268,317)
107,681,873
(56,586,444)
(201,186,997)
29,758,399
(171,428,598)
Complementary Account
210,097,286
(210,097,286)
—
197,656,826
(197,656,826)
—
Net deferred assets (liabilities)
45,828,969
(102,415,413)
(56,586,444)
(3,530,171)
(167,898,427)
(171,428,598)
(1)
(2)
Tax loss carryforwards relate primarily to Peruvian, Chilean and Brazilian entities. In accordance with the current enacted tax law in Chile and Brazil, such tax losses may be carried-forward
indefinitely, however Peruvian tax carryforwards expire after five years.
In September 2004, the Peruvian tax court ruled invalid the tax basis of certain assets held by Edegel S.A. Based on this ruling, the Company has increased the long-term deferred tax liability
ThCh$77,634,406, in order to reflect the write-off of the corresponding tax-basis assets held in Peru. As such estimate of future deductible amounts was determined prior to the acquisition of
Edegel in connection with the acquisition of Endesa-Chile in 1999, the Company has adjusted goodwill by a corresponding amount in accordance with SFAS No. 109 “Accounting for Income Taxes”
(“SFAS No. 109”) and EITF 93-7 “Uncertainties Related to Income Taxes in a business Combination”.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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A reconciliation of the U.S. GAAP Statutory Income Tax rate to the Company’s effective tax rate on net income is as follows:
2002
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
Statutory US GAAP tax
68,847,523
(171,618)
(13,442,787)
76,620,358
(7,005,029)
124,848,447
Effect of higher foreign tax rates
(441,306)
(203,795)
(14,703,049)
59,796,061
7,143,521
51,591,432
Increase (decrease) in rates resulting from:
Price-level restatement not accepted for tax purposes
(7,069,748)
24,178,055
(585,481)
(2,000,668)
(14,020,488)
501,670
Non-taxable items
Non-deductible items (2)
Prior years income tax
Other
US GAAP reclassifications (1)
1,313,507
(8,104,518)
(8,605,036)
(45,526,623)
206
(60,922,464)
(67,141,281)
36,530,588
(7,233,598)
(90,343,074)
4,200,976
(123,986,389)
(2,763,901)
1,470,287
303,892
—
(1,402,329)
—
527,617
(3,638,613)
338,604
1,573,261
771,131
(2,011,767)
2,141,516
—
—
6,308,893
(23,164,381)
(16,551,596)
Tax (benefit) expense at effective tax rate
(5,481,027)
52,567,316
(44,399,019)
5,626,078
(34,329,345)
(26,015,997)
2003
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
Statutory US GAAP tax
(55,973,625)
28,949,060
(13,034,547)
8,394,468
(12,859,850)
(44,524,494)
Effect of higher foreign tax rates
(1,259,732)
32,816,456
(13,417,384)
14,757,804
(17,146,468)
15,750,676
Increase (decrease) in rates resulting from:
Price-level restatement not accepted for tax purposes
7,991,348
(16,638,288)
(1,432,392)
(1,980,860)
149,849
(11,910,343)
Non-taxable items
Non-deductible items (2)
Prior years income tax
Other
22,489,830
36,635,088
5,291,050
(1,189,035)
17,386,812
80,613,745
25,986,780
(2,368,383)
(20,096,695)
(24,471,898)
(36,983,894)
(57,934,090)
(1,416,251)
—
(364,578)
—
—
(1,780,829)
(1,491,609)
(921,707)
(1,530,810)
(948,269)
(2,822,480)
(7,714,875)
US GAAP reclassifications (1)
99,979
—
—
5,107,623
—
5,207,602
Tax (benefit) expense at effective tax rate
(3,573,280)
78,472,226
(44,585,356)
(330,167)
(52,276,031)
(22,292,608)
2004
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
Statutory US GAAP tax
(52,921,771)
2,078,660
(19,086,279)
(167,358)
(24,617,977)
(94,714,725)
Effect of higher foreign tax rates
—
3,333,513
(18,326,510)
9,964,750
(30,024,799)
(35,053,046)
Increase (decrease) in rates resulting from:
Price-level restatement not accepted for tax purposes
(150,058)
(3,082,286)
(8,635,786)
—
(7,372,806)
(19,240,936)
Non-taxable items
Non-deductible items (2)
Prior years income tax
Other
33,175,388
(13,869,938)
(8,193,977)
(18,189,941)
(6,023,497)
(13,101,965)
25,718,937
1,229,903
1,071,166
(3,163,785)
1,511,300
26,367,521
(1,210,217)
—
—
—
—
(1,210,217)
2,822,644
(2,977,643)
14,887,655
290,022
(4,058,283)
10,964,395
US GAAP reclassifications (1)
—
—
—
—
(1,846,447)
(1,846,447)
Tax (benefit) expense at effective tax rate
7,434,923
(13,287,791)
(38,283,731)
(11,266,312)
(72,432,509)
(127,835,420)
(1) US GAAP reclassifications are tax related expenses that under Chilean GAAP are classified as non-operating expenses, but under US GAAP would be classified as income taxes.
(2) This represents mainly deductible temporary differences related to investments in subsidiaries that are permanent in nature for which deferred tax asset are not recognized.
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(d) Segment disclosures
• Distribution – Operating Revenues
The Company is primarily engaged in the distribution and
generation of electricity in Chile, Argentina, Brazil, Colombia and
Perú. Enersis provides these and other services through four business
segments:
• Generation
• Distribution
Revenue is recognized when energy and power is provided at
rates specified under contract terms or prevailing market rates.
• Distribution – Non Operating Revenues
Revenue is recognized as services are provided, such as public
light posts, telephone poles, and other services related to distribution
services.
• Engineering Services and Real Estate
• Engineering Services and Real Estate
• Corporate and other
Revenue is recognized as services are provided, or when
Generation involves the generation of electricity primarily
through its subsidiary Endesa-Chile. Distribution involves the supply
of electricity to regulated and unregulated customers. Engineering
Services and Real Estate includes engineering services and real
estate development. Corporate and other includes computer-related
data processing services and the sale of electricity-related supplies
and equipment. The Company’s reportable segments are strategic
business units that offer different products and services and are
managed separately. The methods of revenue recognition by segment
are as follows:
• Generation
Revenue is recognized when energy and power output is
delivered and capacity is provided at rates specified under contract
terms or prevailing market rates.
projects are sold.
• Corporate and Other
Revenue is recognized as services are provided, or when
supplies or equipment are sold.
The following segment information has been disclosed
in accordance with U.S. reporting requirements, however, the
information presented has been determined in accordance with
Chilean GAAP:
2002
Generation
Distribution
Engineering
services and
real estate
Corporate
and other
Eliminations
Consolidated
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Sales to unaffiliated customers
750,254,737
1,772,402,691
35,361,635
15,481,188
—
2,573,500,251
Intersegment sales
Total revenues
220,912,410
51,822,277
73,674,941
44,370,385
(390,780,013)
—
971,167,147
1,824,224,968
109,036,576
59,851,573
(390,780,013)
2,573,500,251
Operating income
348,487,932
189,963,327
13,850,922
(114,958)
(767,148)
551,420,075
Participation in net income of affiliate
companies
8,842,841
—
—
(287,761)
—
8,555,080
Depreciation and amortization
229,162,303
530,614,762
1,460,962
114,728,646
13,268,373
889,235,046
Identifiable assets including investment in
related companies
6,754,179,495
6,271,267,215
145,749,287
4,446,283,439
(4,561,173,325)
13,056,306,111
Capital expenditures
139,611,864
188,269,772
781,709
458,617
—
329,121,962
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
216
2003
Generation
Distribution
Engineering
services and
real estate
Corporate
and other
Eliminations
Consolidated
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Sales to unaffiliated customers
659,643,635
1,638,545,568
39,316,467
10,849,788
—
2,348,355,458
Intersegment sales
283,644,798
12,707,695
66,311,802
40,005,698
(332,574,181)
70,095,812
—
—
17,954,716
417,227,416
Total revenues
Operating income
Participation in net income of affiliate
companies
943,288,433
1,651,253,263
105,628,269
50,855,486
(332,574,181)
2,418,451,270
346,973,669
193,877,213
13,202,873
(5,205,540)
649,579
549,497,794
17,803,955
—
—
150,761
Depreciation and amortization
171,258,122
213,378,872
1,502,687
31,087,735
Identifiable assets including investment in
related companies
5,601,969,236
5,318,737,230
151,128,970
3,995,294,083
(4,084,236,232)
10,982,893,287
Capital expenditures
134,418,313
130,100,950
540,738
195,288
—
265,255,289
2004
Generation
Distribution
Engineering
services and
real estate
Corporate and
other
Eliminations
Consolidated
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Sales to unaffiliated customers
750,035,825
1,844,311,022
8,883,757
43,937,779
—
2,647,168,383
Intersegment sales
Total revenues
282,626,259
14,549,335
1,470,641
106,381,890
(343,271,164)
61,756,961
1,032,662,084
1,858,860,357
10,354,398
150,319,669
(343,271,164)
2,708,925,344
Operating income
369,025,170
261,413,749
(85,351)
1,047,420
2,800,643
634,201,631
Participation in net income of affiliate
companies
19,203,023
(19,060,445)
8,669
131,864,436
(100,869,800)
31,145,883
Depreciation and amortization
157,553,743
209,967,876
2,507,494
52,357,839
—
422,386,952
Identifiable assets including investment in
related companies
5,317,659,366
5,106,142,327
78,281,860
4,080,676,106
(4,075,234,520)
10,507,525,139
Capital expenditures
96,135,574
164,655,280
19,789
4,413,083
710,627
265,934,353
A summary of activities by geographic area is as follows:
2002
Total revenues
Chile
ThCh$
Argentina
ThCh$
Perú
ThCh$
Brazil
ThCh$
Colombia
ThCh$
Total
ThCh$
827,643,118
308,125,605
302,735,183
646,296,230
488,700,115
2,573,500,251
Long lived assets (net) (1)
2,458,443,985
1,606,522,993
1,279,353,913
2,111,528,359
2,771,859,833
10,227,709,083
2003
Total revenues
875,783,391
299,650,596
255,971,660
564,368,715
415,367,353
2,411,141,715
Long lived assets (net) (1)
2,189,534,487
1,250,382,874
1,024,269,997
1,636,909,696
2,197,672,469
8,298,769,523
2004
Total revenues
884,309,131
328,721,018
287,398,792
668,872,239
539,624,164
2,708,925,344
Long lived assets (net) (1)
2,240,290,819
1,097,975,979
919,907,082
1,476,956,320
1,949,691,742
7,684,821,942
(1) Long-lived assets include property, plant and equipment.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
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217
(e) Concentration of risk:
(f) Schedule of debt maturity:
The Company does not believe that it is exposed to any unusual
credit risk from any single customer. The Company’s debtors are
dependent on the economy in Latin America, which could make them
vulnerable to downturns in the economic activity in the countries in
which the Company operates.
No single customers accounted for more than 10% of revenues
for the years ending December 31, 2002, 2003 and 2004.
Following is a schedule of debt maturity in each of the next
five years and thereafter:
2005
2006
2007
2008
2009
Thereafter
Total
ThCh$
432,697,782
635,432,193
201,103,409
511,403,165
489,848,777
1,424,978,904
3,695,464,230
(g) Disclosure regarding interest capitalization:
Interest expense incurred
Interest capitalized under Chilean GAAP
Interest capitalized under U.S. GAAP
(h) Cash flow information:
Year ended December 31,
2002
ThCh$
2003
ThCh$
2004
ThCh$
460,565,169
430,943,444
360,140,223
62,310,644
36,413,927
10,741,338
21,364,379
7,203,684
15,096,770
(I)
The statement of cash flows under Chile GAAP differs in certain respects from the presentation of a statement of cash flow under U.S.
GAAP as follows:
Year ended December 31,
2002
ThCh$
2003
ThCh$
2004
ThCh$
Cash provided by operating activities under Chilean GAAP
649,911,662
588,838,896
618,005,504
Cash provided by operating activities under U.S. GAAP
649,911,662
588,838,896
618,005,504
Cash used in financing activities under Chilean GAAP
(295,087,517)
(446,651,514)
(189,124,246)
Cash used in financing activities under U.S. GAAP
(295,087,517)
(446,651,514)
(189,124,246)
Cash provided by (used in) investing activities under Chilean GAAP
(348,753,732)
90,584,783
(193,905,575)
Time deposits (1)
(10,535,580)
—
—
Cash provided by (used in) investing activities under U.S. GAAP
(359,289,312)
90,584,783
(193,905,575)
(1) Time deposits with maturities longer than 90 days
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
218
(II)
Cash and cash equivalents includes all highly liquid debt instruments purchased with an original maturity of three months or less:
Cash
Time deposits
Marketable securities
Other current assets
Year ended December 31,
2002
ThCh$
2003
ThCh$
2004
ThCh$
49,883,395
27,029,488
56,494,414
150,760,242
262,660,971
450,743,859
1,597,691
26,747,365
11,434,635
38,150,754
12,321,537
27,677,527
Total cash and cash equivalents under Chilean GAAP
228,988,693
339,275,848
547,237,337
Time deposits with original maturities longer than 90 days
(10,535,580)
—
—
Total cash and cash equivalents under US GAAP
218,453,113
339,275,848
547,237,337
(III) Additional disclosures required under U.S. GAAP are as follows:
Interest paid during the year
Income taxes paid during the year
Assets acquired under capital leases
Years ended December 31,
2002
ThCh$
2003
ThCh$
2004
ThCh$
471,608,186
402,812,319
314,856,910
141,222,264
406,298,084
538,426,126
—
—
27,496,261
(i) Disclosures about fair value of financial instruments
The following methods and assumption were used to estimate
the fair value of each class of financial instruments as of December 31,
2003 and 2004 for which it is practicable to estimate that value:
• Cash
The fair value of the Company’s cash is equal to its carrying
value.
• Time deposits
The fair value of time deposits approximates carrying value
due to the relatively short-term nature.
• Marketable securities
The fair value of marketable securities is based on
quoted market prices of the mutual money market funds held and
approximates carrying value.
• Long-term accounts receivable
The fair value of long-term accounts receivable was estimated
using the interest rates that are currently offered for loans with similar
terms and remaining maturities.
• Long-term debt
The fair value of long-term debt was based on rates
currently available to the Company for debt with similar terms and
remaining maturities.
• Derivative instruments
Estimates of fair values of derivative instruments for which
no quoted prices or secondary market exists have been made using
valuation techniques such as forward pricing models, present value
of estimated future cash flows, and other modeling techniques. These
estimates of fair value include assumptions made by the Company
about market variables that may change in the future. Changes in
assumptions could have a significant impact on the estimate of fair
values disclosed. As a result such fair value amounts are subject to
significant volatility and are highly dependent on the quality of the
assumptions used.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
219
The estimated fair values of the Company’s financial
instruments compared to Chilean GAAP carrying amounts are as
follows:
Cash
Time deposits
Marketable securities
Accounts receivable
Notes receivable, net
Other accounts receivable, net
2003
2004
Carrying
amount
ThCh$
Fair
Value
ThCh$
Carrying
amount
ThCh$
Fair
Value
ThCh$
27,029,488
27,029,488
56,494,414
56,494,414
262,660,971
262,660,971
450,743,859
450,743,859
11,434,635
11,434,635
12,321,537
12,321,537
478,849,624
478,849,624
528,740,129
528,740,129
8,571,693
96,549,123
8,571,693
96,549,123
2,828,014
63,814,202
2,828,014
63,814,202
Amounts due from related companies
149,818,057
149,818,057
114,385,763
114,385,763
Long-term accounts receivable
Accounts payable and other
Notes payable
Long-term debt
Derivatives instruments
(j) Derivative instruments
131,133,420
131,133,420
125,910,089
125,910,089
(224,067,844)
(224,067,844)
(256,402,004)
(256,402,004)
(170,573,373)
(170,573,373)
(190,517,294)
(190,517,294)
(3,899,870,860)
(4,033,070,487)
(3,710,586,142)
(3,924,465,446)
5,913,202
5,913,202
(65,211,933)
(65,211,933)
The Company is exposed to the impact of market fluctuations
in the price of electricity, primary materials such as natural gas,
petroleum, coal, and other energy-related products, interest
rates, and foreign exchange rates. The Company employs policies
and procedures to manage its risks associated with these market
fluctuation on a global basis through strategic contract selection,
fixed-rate and variable-rate portfolio targets, net investment hedges,
and financial derivatives. All derivatives that do not qualify for the
normal purchase and sales exemption under SFAS No. 133 are
recorded at their fair value. On the date that swaps, futures, forwards
or option contracts are entered into, the Company designates the
derivatives as a “hedge”, if the documentation is not appropriate to
designate as a “hedge”, the derivative’s mark-to-market adjustment
flows through the income statement. The Company does not have the
appropriate documentation in place to designate contracts as hedges
of a forecasted transaction or future cash flows (cash flow hedge)
or as a hedge of a recognized assets, liability or firm commitment
(fair value hedge).
The Company has classified its derivatives into the following
general categories: commodity derivatives, embedded derivatives,
and financial derivatives. Certain energy and other contracts for the
Company’s operations in Chile are denominated in the US dollar.
According to SFAS No. 133, an embedded foreign currency derivative
should be separated from the host contract because none of the
applicable exclusions are met (See Embedded Derivative Contracts
below). For purposes of evaluating the functional currency of the
Company’s subsidiaries in Argentina, Perú, Brazil, and Colombia, the
Company applied BT 64, consistent with the methodology described
in Note 36 I paragraph (s), thus the functional currency of these
subsidiaries was the US dollar as these subsidiaries were remeasured
into US dollars because foreign subsidiaries operate in countries
exposed to significant risks as determined under BT 64.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
220
The following is a summary of the Company’s derivative contracts as of December 31, 2003 and 2004.
Embedded derivatives
Financial derivatives
Investment in related companies
Derivative instruments U.S.GAAP Shareholders equity adjustment
Embedded derivatives
Financial derivatives
Investment in related companies
Distribution
ThCh$
(1,518,999)
(7,840,514)
2003
Generation
ThCh$
Total
ThCh$
(7,273,304)
(8,792,303)
(2,995,237)
(10,835,751)
(9,359,513)
(10,268,541)
(19,628,054)
—
(9,359,513)
37,786,158
27,517,617
37,786,158
18,158,104
Distribution
ThCh$
2004
Generation
ThCh$
Total
ThCh$
2,108,644
(20,441,709)
(18,333,065)
(54,316,141)
(9,058,683)
(63,374,824)
(52,207,497)
(29,500,392)
(81,707,889)
—
31,909,042
31,909,042
Derivative instruments U.S.GAAP Shareholders equity adjustment
(52,207,497)
2,408,650
(49,798,847)
The following is the reconciliation of the Company’s derivative contracts from Chile GAAP to US GAAP:
Embedded derivatives
Financial derivatives
Total
Embedded derivatives
Financial derivatives
Shareholders equity adjustment
2003
Chile
GAAP
ThCh$
Adjustment
ThCh$
US GAAP
ThCh$
—
(8,792,303)
(8,792,303)
5,913,202
5,913,202
(16,748,953)
(10,835,751)
(25,541,256)
(19,628,054)
Chile
GAAP
ThCh$
2004
Adjustment
ThCh$
US GAAP
ThCh$
—
(18,333,065)
(18,333,065)
(65,211,933)
1,837,109
(63,374,824)
(65,211,933)
(16,495,956)
(81,707,889)
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
221
Certain Company’s generation and distribution commodity
contracts could be seen as contracts that meet the definition of a
derivative under SFAS No. 133 and would be required to be accounted
for at fair value. These conditions are (i) have an underlying, which
is the market price of power at the delivery location and a notional
amount specified in the contract; (ii) have no initial payment on
entering into the contract; and (iii) have a net settlement provision
or have the characteristic of net settlement because power is readily
convertible to cash, as it is both fungible and actively traded in the
country of generation or country of distribution.
The Company assessed that its commodity contracts that are
requirements contracts do not meet the above definition because the
contracts do not have notional amounts, as they only have maximum
amounts or no specified amounts, and do not include an implicit
or explicit minimum amount in a settlement or a default clause. A
requirements contract allows the purchaser to use as many units of
power as required to satisfy its actual needs for power during the
period of the contract, and the party is not permitted to buy more
than its actual needs.
The Company concluded that all of its power is readily
convertible to cash as energy is actively traded, or the Company
has access, to markets where energy is actively traded. However,
only certain electricity generators or distributors have access to the
energy markets, thus determination as to whether energy could be
considered readily convertible to cash was analyzed on a country by
country basis. Currently, Chilean distributors do not have access to
the Chilean spot market, however this could change in the future if
energy regulations are changed. The Company has also concluded
that multiple-delivery long-term power contracts meet the net
settlement characteristic. Management multiple-delivery long-term
power contracts are readily convertible to cash because the Company
operates in countries with active spot markets, that, although they
contain varying levels of liquidity, can rapidly absorb the contract’s
quantities at each delivery date without significantly affecting the
price, and thus meet the definition of net settlement, consequently
these contracts are accounted for as derivatives that under SFAS
No.133.
Because both the purchases and sales interconnection contracts
are for periods up to 20 years in complex markets, where no similar
term forward market information is available, the Company has
estimated such values based on the best information available,
including using modeling and other valuation techniques. The
Company has recorded the best estimate of fair value, however with
different assumptions such as interest rates, inflation rates, exchange
rates, electricity rates, and increases in cost trends, materially
different fair values could result. As a result such estimates are highly
volatile and dependent upon the assumptions used. The assumption
to measure the fair value of these interconnection related contracts
using the Argentine market prices may have a significant effect on
the Company’s net income and shareholders’ equity.
Such values are included in the reconciliation to U.S. GAAP in
Note 36 paragraph (gg).
Embedded Derivative Contracts
The Company enters into certain contracts that have embedded
features that are not clearly and closely related to the host contract.
As specified in SFAS No. 133, bifurcation analysis focuses on whether
the economic characteristics and risks of the embedded derivative
are clearly and closely related to the economic characteristics and
risks of the host contract. In certain identified contracts, the host
service contract and the embedded feature are not indexed to the
same underlying and changes in the price or value of service will not
always correspond to changes in the price of the commodity to which
the contract is indexed. U.S. GAAP requires embedded features to
be measured at fair value as freestanding instruments. Unless the
embedded contracts are remeasured at fair value under otherwise
applicable GAAP, the embedded feature must be valued at fair value
with changes in fair value reported in earnings as they occur.
Embedded foreign currency derivative instruments are not
separated from the host contract and considered a derivative
instrument if the host contract is not a financia1 instrument and
it requires payments denominated in either: (1) the currency of
any substantial patty to the contract. (2) the local currency of any
substantial party to the contract, (3) the currency used because
the primary economic environment is highly inflationary, or (4) the
currency in which the good or service is routinely denominated in
international commerce.
Financial Derivatives
Changes in interest rates expose the Company to risk as a result
of its portfolio of fixed-rate and variable rate debt. The Company
manages interest rate risk exposure on a global basis by limiting
its variable rate and fixed-rate exposures to certain variable/fixed
mixes set by policy.
The Company manages interest rate risk through the use
of interest rate swaps and collars and cross-currency swaps. The
Company does not enter into financia1 instruments for trading or
speculative purposes.
The Company also uses short duration forward foreign currency
contracts and swaps, and cross-currency swaps, where possible,
to manage its risk related to foreign currency fluctuations. These
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
222
contracts are considered “cover” contracts under Chilean GAAP. In
accordance with Chilean GAAP the gain and losses on these contracts
are deferred until realized as assets or liabilities.
For U.S. GAAP purposes, as the Company has not met the
requirements for designating these derivatives contracts as “hedges”,
the contracts are recorded at fair value in the balance sheet with any
unrealized gain and/or losses being directly recorded in the income
statement.
Net lnvestment Hedges
The Company is also exposed to foreign currency risk arising
from long-term debt denominated in foreign currencies, the majority
of which is the US dollar. This risk is mitigated, as a substantial portion
of the Company’s revenues are either directly or indirectly linked
to the US dollar. Additionally, the Company records the foreign
exchange gains and losses on liabilities related to net investments
in foreign countries which are denominated in the same currency as
the functional currency of those foreign investments. Such unrealized
gains and losses are included in the cumulative translation adjustment
account in shareholders equity, and in this way act as a net investment
hedge of the exchange risk affecting the investments (see Note ll (c)
and Note 22 (f) for further detail).
The accounting treatment for such operations is the same
under Chile GAAP and U.S. GAAP.
(k) Reclassification to U.S. GAAP
Certain reclassifications would be made to the Chilean GAAP
income statement in order to present Chilean GAAP amounts
in accordance with presentation requirements under U.S. GAAP.
Amortization of negative goodwill, amortization of goodwill, and
certain other non-operating income and expense, would be included
in operating income. Recovered taxes included in other non-operating
revenues would be recorded as part of income tax expense under U.S.
GAAP. Colombian equity tax included in non-operating expenses in
2004 would be recorded as part of income tax expense under U.S.
GAAP. Equity participation in income or losses of related companies
included in non-operating income would be presented after income
taxes and minority interest in accordance with U.S. GAAP.
Additionally, the extraordinary loss recognized under Chilean
GAAP in 2002 would be reclassified to income taxes as the Colombian
democracy tax does not meet the definition of extraordinary
in accordance with US GAAP. Under Chilean GAAP a company is
permitted to classify as extraordinary any items that are considered
unusual in their nature or infrequent in occurrence. US GAAP is much
more stringent than Chilean GAAP in allowing items to be considered
extraordinary and the extraordinary loss recognized under Chilean
GAAP in 2002 would be reclassified to income taxes as the Colombian
democracy tax does not meet the definition of extraordinary in
accordance with US GAAP.
The following reclassifications included in the column labeled
“Reclassifications” disclose amounts using a U.S. GAAP presentation,
although the amounts displayed have been determined in accordance
with Chilean GAAP:
Operating income
Non-operating expense, net
Income taxes
Minority interest
Equity participation in income of related companies, net
Amortization of negative goodwill
Net loss before extraordinary items
Extraordinary items
Net loss
2002
Chilean
GAAP
ThCh$
Reclassification
ThCh$ $
U.S. GAAP
ThCh
551,420,075
(458,618,194)
92,801,881
(824,607,845)
559,654,833
(264,953,012)
(68,344,084)
(16,551,594)
(84,895,678)
16,856,520
—
—
8,555,082
116,204,508
(116,204,508)
16,856,520
8,555,082
—
(208,470,826)
(23,164,381)
(231,635,207)
(23,164,381)
23,164,381
—
(231,635,207)
—
(231,635,207)
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
223
2003
Chilean
GAAP
ThCh$
Reclassification
ThCh$
U.S. GAAP
ThCh$
549,497,794
24,199,788
573,697,582
(466,280,940)
(42,609,984)
(80,282,913)
5,093,497
5,207,602
(461,187,443)
(37,402,382)
—
(80,282,913)
Operating income
Non-operating expense, net
Income taxes
Minority interest
Equity participation in income of related companies, net
—
17,954,716
17,954,716
Amortization of negative goodwill
Net income
Operating income
Non-operating expense, net
Income taxes
Minority interest
52,455,603
(52,455,603)
—
12,779,560
—
12,779,560
2004
Chilean
GAAP
ThCh$
Reclassification
ThCh$
U.S. GAAP
ThCh$
634,201,631
(67,123,350)
567,078,281
(368,652,741)
54,930,816
(313,721,925)
(137,241,207)
(1,846,447)
(139,087,654)
(101,106,989)
—
(101,106,989)
Equity participation in income of related companies, net
—
31,145,883
31,145,883
Amortization of negative goodwill
Net income
17,106,902
44,307,596
(17,106,902)
—
—
44,307,596
Certain reclassifications would be made to the Chilean GAAP
balance sheet in order to present Chilean GAAP amounts in accordance
with presentation requirements under U.S. GAAP. Deferred taxes
from depreciation differences that are recorded as short-term under
Chilean GAAP would be recorded as long-term under U.S. GAAP. Real
estate properties under development and construction-in-progress
are included in current assets as inventory in Chilean GAAP and under
U.S. GAAP such assets would have been included as property, plant
and equipment. Additionally, the regulated asset recorded during
2001 by Coelce and Cerj, Brazilian subsidiaries, has been partially
recorded in trade receivables and an additional component was
recorded in current assets by Coelce under Chilean GAAP. However,
under U.S. GAAP the presentation of these regulated assets should
be classified as non-current assets as the recovery of these assets is
not expected in the short term. The amounts receivable and payable
related to financial derivatives have been recorded in the balance
sheet at their gross amounts, whereas, these amounts would have
been recorded at their net amounts by financial institution under
US GAAP, provided the contracts have net settlement provisions.
Negative goodwill would be presented as a deduction to property,
plant, and equipment instead of a separate line-item in other assets.
These reclassifications exclude consolidation of development stage
companies, the effect of which is immaterial.
The effect of the following reclassifications included in the
column labeled “Reclassifications” discloses amounts using a U.S.
GAAP presentation although the amounts displayed have been
determined in accordance with Chilean GAAP:
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
224
Current assets
Property, plant an equipment, net
Other assets
Total assets
Current liabilities
Long-term liabilities
Minority interest
Shareholder’s equity
2003
Chilean GAAP
ThCh$ $
Reclassification
ThCh
U.S. GAAP
ThCh$
1,156,481,276
(51,265,586)
1,105,215,690
8,298,769,523
(64,654,495)
8,234,115,028
1,527,642,488
62,433,606
1,590,076,094
10,982,893,287
(53,486,475)
10,929,406,812
1,155,329,804
(11,757,449)
1,143,572,355
3,782,447,926
(41,729,026)
3,740,718,900
3,433,013,869
2,612,101,688
—
—
3,433,013,869
2,612,101,688
Total liabilities and shareholders’ equity
10,982,893,287
(53,486,475)
10,929,406,812
Current assets
Property, plant an equipment, net
Other assets
Total assets
Current liabilities
Long-term liabilities
Minority interest
Shareholder’s equity
2004
Chilean GAAP
ThCh$ $
Reclassification
ThCh
U.S. GAAP
ThCh$
1,519,081,190
(53,518,614)
1,465,562,576
7,684,821,942
(41,032,908)
7,643,789,034
1,303,622,007
80,508,030
1,384,130,037
10,507,525,139
(14,043,492)
10,493,481,647
1,018,810,914
(241,374)
1,018,569,540
3,804,155,081
(13,802,118)
3,790,352,963
3,125,006,002
2,559,553,142
—
—
3,125,006,002
2,559,553,142
Total liabilities and shareholders’ equity
10,507,525,139
(14,043,492)
10,493,481,647
(l) Employee Benefit Plans
Benefits for Retired Personnel
Enersis S.A. and its subsidiaries sponsor various benefit plans
for its current and retired employees. A description of such’ benefits
follows:
Other benefits provided to certain retired personnel of Enersis
include electrical service rate subsidies, additional medical insurance
and additional post-retirement benefits. Descriptions of these benefits
for retired personnel are as follows:
Severance indemnities
I)
Electrical rate service
The provision for severance indemnities, included in the account
“Accrued expenses” short and long-term is calculated in accordance
with the policy set forth in Note 2 (n), using the current salary levels of
all employees covered under the severance indemnities agreement,
an assumed discount rate of 9.5% for the years ended December 31,
2002, 2003 and 2004, and an estimated average service period
based on the years of services for the Company.
This benefit is extended only to certain retired personnel
of Enersis. These electric rate subsidies result in the eligible
retired employees paying a percentage of their total monthly
electricity costs, with Enersis paying the difference.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
II) Medical benefits
Followings is a schedule of estimated pay–out of pension
benefits in each of the next five years:
225
2005
2006
2007
2008
2009
Thereafter
Total
As of December 31,
2004
ThCh$
25,040,759
25,350,622
26,205,461
26,789,273
27,555,039
108,176,149
239,117,303
This benefit provides supplementary health insurance,
which covers a portion of health benefits not covered under
the institutional health benefits maintained by employees
of Enersis. This benefit expires at the time of death of the
pensioner.
III)
Supplementary pension benefits
Eligible employees are able to receive a monthly amount
designed to cover a portion of the difference between their
salary at the point of retirement and the theoretical pension
that would have been received had the employee reached
the legal retirement age of the Institución de Previsión Social
(Institute of Social Welfare). This benefit expires upon the death
of the pensioner for the Enersis employee, however, continues
to cover the surviving-spouse in the case of employees of the
subsidiary Endesa-Chile.
IV) Worker’s compensation benefits
Employees that were entitled to Worker’s compensation
insurance in prior years for work related injuries receive
benefits from the Company when that insurance expires. This
benefit continues at the time of death of the pensioner, to
cover the surviving-spouse.
T he Company has recognized liabili ties rela ted to
complementary pension plan benefits and other postretirement
benefits as stipulated in collective bargaining agreements.
Under U.S. GAAP, post-retirement employee benefits have
been accounted for in accordance with SFAS No. 87 and SFAS
No. 106, with inclusion of prior-period amounts in current
year’s income as the amounts are not considered significant
to the overall financial statement presentation. The effects of
accounting for post-retirement benefits under U.S. GAAP have
been presented in paragraph (gg), above. The following data
represents Chile GAAP amounts presented under FAS N°132
Revised 2003 Employers’ Disclosures about Pensions and other
postretirement Benefits, for Company’s post-retirement benefit
plans.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
226
Assets and obligations
Accumulated benefit obligation
Plan assets at fair value
Unfunded accumulated benefit
Changes in benefit (obligations)
Benefit (obligations) at January 1
Price-level restatement
Foreign exchange effect
Net periodic expense
Benefits paid
Company contributions
At December 31, 2003
Pension Benefits
Other Benefits
Unfunfed
ThCh$
Funded
ThCh$
Total
ThCh$
Total
ThCh$
(37,809,722)
(177,171,124)
(214,980,846)
(30,332,309)
—
122,072,571
122,072,571
—
(37,809,722)
(55,098,553)
(92,908,276)
(30,332,309)
(59,613,434)
(68,737,172)
(128,350,607)
(35,726,334)
420,320
8,560,762
(11,936,422)
2,403,135
—
680,566
11,820,243
(17,491,053)
10,658,355
293,417
1,100,886
20,381,005
(29,427,475)
13,061,490
293,417
269,465
4,136,709
1,453,111
50,387
(1,788,775)
(31,605,436)
Benefit (obligations) at December 31
(60,165,640)
(62,775,645)
(122,941,285)
Funded Status of the Plans
Proyected Benefits Obligation
Fair value of the plans assets
Funded Status
Unrecognized loss (gain)
Unrecognized net prior service cost
Net liability recorded under U.S. GAAP
Change in the plan assets
Fair value of plans assets, beginning
Foreign exchange effect
Actual return on the plan assets
Employer contributions
Plan participant contributions
Benefits paid
Fair value of plans assets, ending
Components of net periodic
Benefits expenses
Service cost
Interest cost
Expected return on assets
Amortization gain (loss)
Amortization of transition asset
Net periodic expenses
(58,992,700)
(178,727,451)
(237,720,151)
(30,885,705)
—
122,072,571
122,072,571
(58,992,700)
(56,654,880)
(115,647,581)
(1,792,630)
(16,333,965)
619,690
10,213,200
(18,126,595)
10,832,891
(60,165,640)
(62,775,645)
(122,941,285)
—
(30,885,705)
(12,519,943)
11,800,212
(31,605,436)
—
—
—
—
—
—
—
(27,663)
(7,633,161)
—
(3,645,636)
(629,963)
(11,936,422)
96,482,018
(11,325,944)
36,509,808
9,257,830
3,922,852
(12,773,994)
122,072,571
(1,358,526)
(16,654,126)
25,672,370
(23,119,488)
(2,031,282)
(17,491,052)
96,482,018
(11,325,944)
36,509,808
9,257,830
3,922,852
(12,773,994)
122,072,571
(1,386,188)
(24,287,287)
25,672,370
(26,765,124)
(2,661,245)
(29,427,474)
—
—
—
—
—
—
—
759,480
235,724
—
(360,131)
818,037
1,453,111
Assumptions as of December 31
Weighted - discount rate (1)
Weighted - salary increase
Weighted - return on plan assets (1)
Weighted - long term inflation (2)
(1) Includes fixed long term inflation assumption detail in (2)
Pension Benefits
Colombia
12.8%
7.5%
11.3%
7.5%
Brazil
11.3%
5.5%
–
4.5%
Chile
9.5%
3.0%
–
3.0%
Other Benefits
Brazil
11.3%
–
Colombia
12.8%
Chile
9.5%
–
–
3.0%
4.5%
7.5%
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
227
At December 31, 2004
Pension Benefits
Other Benefits
Non
Contributory
Contributory
Total
Total
(56,999,482)
(192,477,205)
(249,476,687)
(35,747,958)
—
128,088,182
128,088,182
—
(56,999,482)
(64,389,023)
(121,388,506)
(35,747,958)
(60,165,640)
(62,775,645)
(122,941,285)
(31,605,436)
(924,751)
8,181,886
(2,799,071)
721,624
—
1,951,985
1,908,253
(16,782,199)
16,267,061
(41,248)
1,027,234
10,090,139
(19,581,270)
16,988,685
(41,248)
(473,971)
(284,233)
(3,451,452)
4,122,302
(8,034,793)
Assets and obligations
Accumulated benefit obligation
Plan assets at fair value
Unfunded accumulated benefit
Changes in benefit (obligations)
Benefit (obligations) at January 1
Price-level restatement
Foreign exchange effect
Net periodic expense
Benefits paid
Company contributions
Benefit (obligations) at December 31
(54,985,952)
(59,471,793)
(114,457,745)
(39,727,584)
Funded Status of the Plans
Projected Benefits Obligation
Fair value of the plans assets
Funded Status
Unrecognized loss (gain)
Unrecognized net prior service cost
Net liability recorded under U.S. GAAP
Change in the plan assets
Fair value of plans assets, beginning
Foreign exchange effect
Actual return on the plan assets
Employer contributions
Plan participant contributions
Benefits paid
Fair value of plans assets, ending
Service cost
Interest cost
Expected return on assets
Amortization gain (loss)
Amortization of transition asset
Net periodic expenses
(56,999,482)
(180,867,381)
(237,866,863)
(38,719,674)
—
128,088,182
128,088,182
—
(56,999,482)
—
2,013,530
(52,779,199)
(17,340,605)
10,648,011
(109,778,681)
(17,340,605)
12,661,541
(54,985,952)
(59,471,793)
(114,457,745)
(38,719,674)
9,174,116
(10,182,026)
(39,727,584)
—
—
—
—
—
—
—
(638,721)
(7,199,307)
—
5,038,957
—
(2,799,071)
122,072,571
(12,737,533)
12,601,408
7,373,920
2,624,397
122,072,571
(12,737,533)
12,601,408
7,373,920
2,624,397
(3,846,581)
(3,846,581)
128,088,182
128,088,182
(1,395,438)
(2,034,159)
(18,539,098)
(25,738,405)
26,441,379
(15,412,512)
(7,876,530)
(16,782,199)
26,441,379
(10,373,555)
(7,876,530)
(19,581,270)
—
—
—
—
—
—
—
(497,147)
(985,671)
(1,201,637)
(766,997)
—
(3,451,452)
Assumptions as of December 31
Weighted - discount rate (1)
Weighted - salary increase
Weighted - return on plan assets (1)
Weighted - long term inflation (2)
(1) Includes fixed long term inflation assumption detail in (2)
Pension Benefits
Other Benefits
Chile
Colombia
Brazil
Chile
Brazil
Colombia
6.5%
4.0%
—
2.5%
11.9%
6.8%
—
6.8%
10.2%
5.2%
10.2%
4.0%
6.5%
4.0%
—
2.5%
10.2%
5.2%
—
4.0%
11.9%
6.8%
—
6.8%
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
228
(m) Comprehensive income (loss)
In accordance with U.S. GAAP, the Company reports a measure
of all changes in shareholders’ equity that result from transactions
and other economic events of the period other-than transactions
with owners (“comprehensive income”). Comprehensive income
is the total of net income and other non-owner equity transactions
that result in changes in net shareholders’ equity.
The following represents accumulated other comprehensive
income balances as of December 31, 2002, 2003 and 2004 (in
thousands of constant Chilean pesos as of December 31, 2004).
Beginning balance
Credit (charge) for the period
Ending balance
Beginning balance
Credit (charge) for the period
Ending balance
Beginning balance
Credit (charge) for the period
Ending balance
2002
Chilean GAAP
cumulative
translation
adjustment
Effect of U.S. GAAP
adjustments on
cumulative
translation adjustment
Accumulated other
comprehensive
income (loss)
ThCh$
30,282,154
21,322,955
51,605,109
ThCh$
(2,216,472)
(12,582,928)
(14,799,400)
2003
ThCh$
28,065,682
8,740,027
36,805,709
Chilean GAAP
cumulative
translation
adjustment
Effect of U.S. GAAP
adjustments on
cumulative
translation adjustment
Accumulated other
comprehensive
income (loss)
ThCh$
51,605,109
(74,845,570)
(23,240,461)
ThCh$
(14,799,400)
52,450,844
37,651,444
2004
ThCh$
36,805,709
(22,394,726)
14,410,983
Chilean GAAP
cumulative
translation
adjustment
Effect of U.S. GAAP
adjustments on
cumulative
translation adjustment
Accumulated other
comprehensive
income (loss)
ThCh$
(23,240,461)
(96,275,517)
(119,515,978)
ThCh$
37,651,444
12,452,098
50,103,542
ThCh$
14,410,983
(83,823,419)
(69,412,436)
The Company does not recognize deferred tax assets associated
to cumulative translation adjustment as the investment they are
associated with are permanent in nature.
(n) Discontinued operations
In October of 2001, the FASB issued SFAS No. 144 which is
effective for fiscal years beginning after December 15, 2001. SFAS
No. 144 establishes accounting and reporting standards for the
impairment and disposal of long-lived assets and discontinued
operations. The Company adopted SFAS No. 144 in 2002. The
application of this statement resulted in the classification, and
separate financial presentation of certain entities as discontinued
operations, the results of which are not included in continuing
operations. There was no impairment of assets related to discontinued
operations, as their fair value exceeded their carrying value. Fair
values used in these calculations has been determined by using the
agreed upon sales prices.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
In 2002, the Endesa Chile (Enersis Subsidiary) committed
to a plan to dispose the 60% equity participation it held in the
consolidated subsidiary, Infraestructura Dos Mil S.A. It was accounted
for as discontinued operations in accordance with SFAS No. 144 and,
accordingly, amounts in reconciliation of net income to US GAAP and
the additional disclosure notes required under US GAAP for all periods
shown, reflect that component as a discontinued operation.
The major classes of discontinued consolidated assets,
consolidated liabilities and minority interest included in the Chilean
GAAP Endesa Chile consolidated Balance Sheet are as follows:
229
As of December 31,
2002
ThCh$
Assets:
Cash
Account receivable, net
Other current assets
Property, plant and equipment, net
Intangibles
Other assets
Total assets of discontinued operations
Liabilities:
Current liabilities
Long term liabilities
Income taxes payable (including deferred)
Minority interest
Total liabilities and minority interest of
discontinued operations
196,765
15,290,034
36,601,387
174,435,826
35,633
18,692,185
245,251,830
76,792,885
100,581,027
864,514
754,838
178,993,264
The major classes of consolidated revenues and expenses
included in the US GAAP Enersis consolidated Income Statement
are as follows:
Sales
Costs of sales
Gross profit
Administrative and selling expenses
Operating income
Non operating (loss) income
Income before taxes and minority interest
Income tax
Minority interest
Net income for the year
2002
ThCh$
20,914,128
(10,312,883)
10,601,245
(1,355,803)
9,245,442
(7,765,412)
1,480,030
(1,006,734)
(302,357)
170,939
As of December 31,
2003
ThCh$
2004
ThCh$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
230
(o) Goodwill and intangible assets
As discussed in Note 36 paragraph (i), Enersis S.A. adopted
SFAS 142, which requires companies to stop amortizing goodwill and
certain intangible assets with an indefinite useful life. Instead, FAS
142 requires that goodwill and intangible assets deemed to have
an indefinite useful life be reviewed for impairment upon adoption
of SFAS 142, effective January 1, 2002 and annually thereafter.
Under SFAS 142, goodwill impairment is deemed to exist if the net
book value of a reporting unit exceeds its estimated fair value. The
Company’s reporting units are at the operating subsidiary level. This
methodology differs from Enersis’s previous policy, as provided under
accounting standards existing at that time of using undiscounted
cash flows on an enterprise-wide basis to determine if goodwill was
recoverable. Subsequent to adoption in 2002 of SFAS No. 142, due to
changes in circunstances, the Company recognized a non-cash charge
of ThCh$615,389,513 to reduce the carrying value of goodwill.
In calculating the impairment charge, the fair value of the
impaired reporting units underlying the segments were estimated
using discounted cash flow methodology. The ThCh$615,389,513
goodwill impairment is associated entirely with goodwill associated
with investments in Argentina and Brazil. The impairment reflects
the decline in the Company’s revenues and forecasted cash flows in
their Argentina and Brazilian subsidiaries and the increase in inflation
and interest rates and decreasing expectations of the currencies in
Argentina and Brazil. Prior to performing the review for impairment,
SFAS 142 required that all goodwill deemed to be related to the entity
as a whole be assigned to all of the Company’s reporting units,
including the reporting units of the acquirer.
A summary of the changes in the Company’s goodwill under
U.S. GAAP during the year ended December 31, 2003 and 2004, by
country of operation and segment is as follows:
Goodwill by Country
Chile
Colombia
Perú
Total
Goodwill by Segment
Generation
Distribution
Other
Total
Acquisitions
(Disposals)
2003
Translation
adjustment
Impairment
December 31,
ThCh$
ThCh$
ThCh$
ThCh$
January 1,
ThCh$
1,035,214,601
(11,216,517)
—
75,058,126
22,054,183
—
—
(16,371,275)
(4,010,358)
1,132,326,910
(11,216,517)
(20,381,633)
—
—
—
—
1,023,998,084
58,686,851
18,043,825
1,100,728,760
January 1,
ThCh$
948,462,530
Acquisitions
(Disposals)
ThCh$
76,503
2003
Translation
adjustment
ThCh$
(9,455,368)
183,799,541
(11,293,020)
(10,926,265)
64,839
—
—
1,132,326,910
(11,216,517)
(20,381,633)
Impairment
December 31,
ThCh$
ThCh$
—
—
—
—
939,083,665
161,580,256
64,839
1,100,728,760
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
231
2004
Goodwill by Country
January 1,
Acquisitions
(Disposals)
Translation
adjustment
Impairment
December 31,
Chile
Colombia
Perú
Total
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
1,023,998,084
77,634,406
—
58,686,851
(12,042,932)
(3,927,317)
18,043,825
—
(1,519,204)
1,100,728,760
65,591,474
(5,446,521)
—
—
—
—
1,101,632,490
42,716,602
16,524,621
1,160,873,713
Goodwill by Segment
January 1,
(Disposals)
2004
Acquisitions
adjustment
Impairment
Translation
December 31,
Generation
Distribution
Other
Total
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
939,083,665
77,634,406
(3,581,620)
161,580,256
(12,042,932)
(1,864,901)
64,839
—
—
1,100,728,760
65,591,474
(5,446,521)
—
—
—
—
1,013,136,451
147,672,423
64,839
1,160,873,713
The Company’s intangible assets were ThCh$79,100,256 and
ThCh$80,708,810 and related accumulated amortization were
ThCh$40,254,130 and ThCh$44,013,845 as of December 31, 2003
and 2004, respectively. There is no difference between Chilean and
U.S. GAAP in the amortization of intangible assets because all of the
Company’s intangible assets are subject to amortization, since they
relate to finite contracts or concessions.
(p) Asset retirement obligations
As discussed in Note 36 paragraph (ff), the Company adopted
SFAS No. 143 effective January 1, 2003. The following table describes
all changes to the Company’s U.S. GAAP asset retirement obligation
during the year ended December 31, 2003 and 2004:
Balance as of January 1,
Cumulative Translation Adjustment
Liabilities incurred in the period
Accretion expense
Balance as of December 31,
As of December 31,
2003
ThCh$
(602,829)
109,633
—
(44,474)
(537,670)
2004
ThCh$
(537,670)
39,054
—
(637,297)
(1,135,913)
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
232
The pro forma effects of the application of SFAS No. 143 as if
the Statement had been adopted on January 1, 2001 (rather than
January 1, 2003) are as follows (on a U.S. GAAP basis):
As of
December 31,
2002
ThCh$
Pro forma amounts assuming the accounting
change is applied retroactively net-of-tax:
Net income (loss)
Net income (loss) per common share – basic
and diluted
(341,592,536)
(41.20)
(q) Recent accounting pronouncements
The following new accounting standards have been adopted
by the Company during the year-ended December 31, 2004 and the
impact of such adoption, if applicable, has been presented in the
accompanying consolidated financial statements.
i.
In January 2003, the Financial Accounting Standards Board
(“FASB”) issued Interpretation No. 46, Consolidation of Variable
Interest Entities (“FIN 46”),an interpretation of Accounting Research
bulletin No. 51, “Consolidated Financial Statement”, which requires
the consolidation by a business enterprise of variable interest entities,
if the business enterprise is the primary beneficiary. The FASB has
amended FIN 46, now known as FIN 46 Revised December 2003
(“FIN 46(R)”). For the purpose of analyzing investments in potential
variable entities formed after January 31, 2003, the Company has
applied the provisions of FIN 46 and FIN 46(R) as of January 1, 2004.
For the purpose of analyzing potential variable interest entities
previously defined as special purpose entities (“SPE’s”) created
before February 1, 2003; the Company has applied the provisions
of FIN 46 and FIN 46(R) for the period beginning January 1, 2004.
The Company has also applied the provisions of FIN 46 and FIN 46(R)
in determining whether the Company holds potential interest in
variable interest entities not previously defined as SPE’s for the period
ended December 31, 2004. The adoption of FIN 46(R) did not have a
material impact on the Company’s consolidating financial position,
results of operations or cash flows.
ii.
In December 2004, the FASB deferred the issuance of their
final standard on earnings per share SFAS No. 128R, Earnings per
Share, an amendment to FAS 128. The final standard is expected
to be effective in 2005 and will require retrospective application
for all prior periods presented. The significant proposed changes
to the EPS computation are changes to the treasury stock method
and contingent share guidance for computing year-to-date diluted
EPS, removal of the ability to overcome the presumption of share
settlement when computing diluted EPS when there is a choice of
share or cash settlement and inclusion of mandatorily convertible
securities in basic EPS. The Company is currently evaluating the
proposed provisions of this amendment to determine the impact
on its consolidated financial statements.
iii. In December 2004, the FASB issued SFAS No. 153, Exchanges
of Nonmonetary Assets, an amendment of APB Opinion No. 29.
APB Opinion No. 29, Accounting for Nonmonetary Transactions,
provided an exception to its basic measurement principle (fair value)
for exchanges of similar productive assets. Under APB Opinion No.
29, an exchange of a productive asset for a similar productive asset
was based on the recorded amount of the asset relinquished. SFAS
No. 153 eliminates this exception and replaces it with an exception
for exchanges of nonmonetary assets that do not have commercial
substance. SFAS No. 153 is effective prospectively for nonmonetary
asset exchanges occurring in fiscal years beginning January 1, 2006
for the Company.
iv. In November 2004, the FASB issued SFAS No. 151, Inventory
Costs, an amendment of ARB No. 43, Chapter 4 (SFAS No. 151), to
clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs and wasted material (spoilage) relating to
inventory pricing. SFAS No. 151 requires that such items be recognized
as current-period charges regardless of whether they meet the
criterion of “so abnormal” and requires that the allocation of fixed
production overheads to inventory be based on the normal capacity
of the production facilities. The guidance is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. The
Company is currently evaluating the provisions of this pronouncement
to determine the effects on its financial condition, statements of
operations, and cash flows.
v.
In March 2005, the FASB issued FASB Interpretation (“FIN”)
No. 47, “Accounting for Conditional Asset Retirement Obligations,”
which clarifies the term conditional asset retirement obligation as
used in SFAS No. 143, “Accounting for Asset Retirement Obligations,”
as a legal obligation to perform an asset retirement activity in which
the timing and/or method of settlement are conditional on a future
event that may or may not be within the control of the Company.
FIN No. 47 is effective no later than the end of fiscal years ending
after December 15, 2005. The Company is currently evaluating the
impact of adopting this interpretation.
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(r) Subsequent events
On May 24, 2005, the Board of Directors of Enersis S. A.
approved the plan to reorganize its subsidiaries in Brazil, which seeks
to simplify the shareholding structure of our Brazilian companies
by having all of them become subsidiaries of a new Brazilian
holding company, Endesa Brasil S.A.. Our Brazilian companies are
currently owned by Endesa Internacional (our parent company, and
a subsidiary of ENDESA, S.A.), Endesa-Chile, Chilectra and Enersis
(the “Contributing Shareholders”). The initial intention is for Endesa-
Brasil to be ultimately owned approximately as follows: Endesa-Chile,
Endesa Internacional and Chilectra would have voting interests of
33.6%, 23.7% and 19.2%, respectively. Enersis on a stand-alone basis,
would have a 23.5% interest. Because of Enersis’ interests in both
Endesa-Chile and Chilectra, Enersis would hold majority control over
Endesa-Brasil, and would consolidate the company.
Completion of the Brazilian reorganization is subject to receipt
of regulatory approvals in Brazil
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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C O N S O L I D A T E D M A T E R I A L I N F O R M A T I O N
EN ERSIS S. A . ( PARENT COMPANY)
Capital Increase of Cerj
The company informed the regulatory authority on March 1 and
25, 2004 about progress and the conclusion of the capital increase of
the Brazilian electricity distribution subsidiary, Cerj, as follows:
1.
2.
3.
4.
The Brazilian subsidiary of Enersis S.A., Companhia de
Eletricidade do Río de Janeiro S.A. (Cerj) has made and
concluded a capital increase amounting to BR$710,000,000
(approximately US$243 million) through the issue of
1,339,622,641,509 new common shares at BR$0.53 for every
1,000 shares.
O n F e b r u a r y 2 7, 20 0 4 , a n d w i t h i n t h e f i n a n c i a l
strengthening plan for its subsidiary Cerj, Enersis subscribed,
through its subsidiary Enersis Internacional, for a total
of 1,335,849,056,604 shares in the new issue of Cerj,
corresponding to the whole of the rights of the Contolling
Group (99.3% approximately) in this company. Endesa Spain,
Electricidade de Portugal S.A. and Chilectra S.A., (the members
of the Controlling Group) had previously ceded their preemptive
rights to Enersis which therefore subscribed for its own rights
and those thus ceded to it. In addition, Enersis, acting as
above, subscribed during the offer of the remaining portion
of this capital increase that was not acquired by the minority
shareholders in Cerj, i.e. a further 3,771,390,630 common
shares. Enersis, through its subsidiary Enersis Internacional,
therefore subscribed for a total of 1,339,620,447,234 new Cerj
common shares.
Enersis has paid for the shares subscribed for through the
capitalization of various loans that had made indirectly to
Cerj.
Enersis will transfer to its subsidiary Chilectra, operating directly
or through its agency and 10 subsidiaries, 760,255,861,477
shares issued by Cerj that were recently subscribed by Enersis
in the above capital increase. This transfer will be made at
BR$0.53 for every 1,000 shares of Cerj. As a result of this share
sale, the shareholdings in Cerj will be as follows: Electricidade
de Portugal 7.70%, Endesa Spain 10.71%, Enersis 35.13%,
Chilectra 46.10% and others 0.36%.
5.
As a result of the above subscription by Enersis of the capital
increase in Cerj and the share transfer to Chilectra, the
subsidiary Cerj has reduced its debt substantially, without
causing any effects to the results of Enersis.
Registration of International Bonds with the Securities and
Exchange Commission, SEC.
1.
2.
3.
In November 2003, Enersis, acting through its Agency in
Cayman Islands (hereinafter Enersis), placed bonds, not
registered with the SEC, with institutional investors on the
American and European markets under Rules 144A and S for
a total of US$350 million, as was informed at the time. These
bonds were later listed on the Luxembourg Stock Exchange.
In accordance with the respective Offering Memorandum dated
November 19, 2003, Enersis has obtained, on August 6, 2004,
the registration with the SEC of a new bond issue through the
approval of the document called F-4/A. This registration will
enable, within a sole period of at least 20 business 198 days,
holders of the issue mentioned in 1. above to exchange these
for the new bonds as described below.
The new bonds will also be issued by Enersis, in the same
way as described in 1. above, for a total amount of up to US$
350 million repayable in full on January 15, 2014 and with an
interest coupon of 7.375% p.a. The new bonds will have the
same financial characteristics as the bonds issued November
2003, except that their registration with the SEC will give these
securities greater potential liquidity to the benefit of their
bond-holders. Once the exchange period is concluded, these
will be issued by Enersis and listed on the Luxembourg Stock
Exchange.
Interim Dividends
The board of Enersis, on January 28, 2004, agreed unanimously
not to distribute an interim dividend in February 2004 against the
results of 2003, in accordance with the current dividend policy,
because the conditions for doing so, as set out in that dividend policy,
were not met.
The board of Enersis, on April 28, 2004, agreed unanimously
not to distribute an interim dividend in May 2004 against the results
to March 2004, in accordance with the current dividend policy,
because the conditions for doing so, as set out in that dividend policy,
were not met.
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The board of Enersis, on July 28, 2004, agreed unanimously
not to distribute an interim dividend in August 2004 against the
results to June 2004, in accordance with the current dividend policy,
because the conditions for doing so, as set out in that dividend policy,
were not met.
The board of Enersis, on October 27, 2004, agreed unanimously
not to distribute an interim dividend in November 2004 against the
results to September 2004, in accordance with the current dividend
policy, because the conditions for doing so, as set out in that dividend
policy, were not met.
CH ILEC TR A S. A .
1. Dividend Policy for 2004
The dividend policy that the board of Chilectra S.A. expects to
follow in 2004 is as follows:
Distribute interim dividends in the months of May, August
and November 2004 and in February 2005 against the net income
for 2004. In each of those months, 85% of the income from the
company’s normal operations for the quarters ended in March, June,
September and December of that year, will be distributed. In this
calculation, interim dividends already distributed with respect to
2004 will be deducted from 85% of the accumulated income in the
quarter.
Income from normal operations shall be understood to be the
company’s profits obtained in 2004 but excluding the following:
1.
2.
3.
4.
Accounting effects produced by the valuation of contributions
made to subsidiary companies.
Accounting effects of recognizing the premium on the placing
of shares by subsidiaries.
Income directly or indirectly arising from holdings in associate
companies in Chile or abroad.
Income generated by foreign or Chilean subsidiaries in which
the company directly or indirectly holds less than 60% of their
share capital, and income arising from asset disposals.
5.
The amounts of goodwill and negative goodwill.
Should the total contribution of these events be negative, it will
be taken into account in calculating the income for distribution.
Consequently, the board will not distribute interim dividends
against the income deriving from these events and the ordinary
shareholders’ meeting should pronounce in this respect when it
approves the final dividend. The above represents the intentions
of the board but compliance will depend on the earnings actually
produced and also on the results of projections that the company
periodically makes, or the existence of certain conditions.
With respect to the final dividend policy, the board intends that
the total dividends to be distributed against the year will be the same
as the interim dividends already distributed or the minimum dividends
as established in the Corporations Law, whichever is the greater.
2. Investment and Financing Policies for 2004
The board agreed to establish the following investment and
financing policy for 2004:
2.1 Investments
The company will make investments as authorized in its
bylaws in areas related to supply capacity expansion works related to
electricity demand, contributions to subsidiary or associate companies
and in contributions for investment or formation of subsidiaries or
associates whose business is allied, related or linked to energy in
any of its forms, the supply of public utilities or which have energy
as a principal input.
Investments related to the company’s expansion will be those
necessary for the optimum satisfaction of electricity demand in its
concession zone. With respect to investments in public-utility related
companies, these will be those necessary for them to comply with
their corporate objects and carry out their concession functions.
Regarding investments in subsidiary or associate companies,
these will be made in projects that maximize the company’s value
considering the degree of risk related to such investments and in
accordance with the company’s bylaws.
For the control of investments and as established in the
company’s bylaws, the appointment of directors to represent the
company will be proposed at shareholders’ meetings of the subsidiary
and associate companies, such persons preferably being members
of the board or executives of the company or its related companies.
It will also establish in the subsidiaries investment, financing and
commercial policies, and accounting systems and criteria, that they
should follow, and supervise the performance of the subsidiaries
and associates.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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2.2 Financing
DIVIDENDS
The funds needed for the company’s Chilean and international
expansion are obtained under special financing plans, in addition
to those generated by its operating activities. Alternative sources
of funds in these plans include, according to the needs, bond issues,
suppliers’ credits, bank and syndicated loans, multinational agency
loans, straight or convertible bonds, etc. Funds may also be obtained
from Chilean and foreign investors and others.
SHAREH O LD ERS’ MEE TI N G
Ordinary Shareholders’ Meeting
The ordinary shareholders’ meeting was held on March 25,
2004 and resolved on the following:
1.
Approval of the annual report, balance sheet, financial
statements and report of the external auditors for the year
ended December 31, 2003.
1.
2.
3.
4.
5.
The company’s board, on January 28, 2004, agreed to
distribute on February 26, 2004, an interim dividend of
Ch$33.92 per share against net income for 2003.
The ordinary shareholders’ meeting held on March 25, 2004
agreed not to distribute a final dividend.
The company’s board, on April 27, 2004, agreed to distribute
on May 27, 2004, an interim dividend of Ch$11 per share
against net income for 2004.
The company’s board, on July 27, 2004, agreed to distribute
on August 26, 2004, an interim dividend of Ch$10 per share
against net income for 2004.
The company’s board, on October 26, 2004, agreed to
distribute on November 25, 2004, an interim dividend of
Ch$40 per share against net income for 2004.
2.
Approval and distribution of earnings and information of the
dividend policy for 2004.
PU RCHASE O F SHARES I N CER J
3.
Setting of the directors’ remuneration.
4.
Setting of the remuneration of the Directors’ Committee and
its budget.
The board on March 25, 2004 approved the purchase directly,
or through its Agency or an investment vehicle, from Enersis, the latter
acting directly or through its Cayman Island Agency, 760,255,861,477
shares in the Brazilian company Cerj, for BR$0.53 per one thousand
shares.
5.
Appointment of the external auditors.
Extraordinary Shareholders’ Meeting
An extraordinary shareholders’ meeting was held on March
25, 2004 which approved an amendment to clause 4 of the bylaws
concerning the corporate objects, adding letter f) to that clause
stating “f) directly or through other companies, buy, sell, import,
export, prepare or produce, commercialize and distribute all kinds
of merchandise relating to energy, the home, sports, recreation or
computers.”
O RGAN IZ ATI O NAL STRUC TU RE
1. The board, on January 28, 2004, approved the
company’s new organizational structure.
Among the most important features is the creation of a
Technical Management under Alejandro Gómez Vidal. Alfredo Herrera
Carrasco was also appointed Chief Commercial Officer and Christián
Mosqueira Vargas as Chief Corporate Businesses Officer. The board
accepted the resignations of Rolando Hechenleitner Kaschel as Chief
Distribution Officer and Edgardo González Garlick as Chief Corporate
Businesses Officer.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
The structure is as follows:
CHIEF COMMUNICATIONS OFFICER
Marcelo Castillo
CHIEF REGIONAL DISTRIBUTION OFFICER
Marcelo Silva
CHIEF ECONOMIC AND CONTROL OFFICER
Juan P. Spoerer
CHIEF ECONOMIC AND CONTROL OFFICER
Jorge Faúndez
CHAIRMAN
Jorge Rosenblut
CHIEF EXECUTIVE OFFICER
Rafael López
CHIEF OPERATION S OFFICER
Juan Camilo Olavarría
237
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CHIEF REGIONAL SERVICES OFFICER
Cristóbal Sánchez
LEGAL COUNSEL
Gonzalo Vial
CHIEF REGULATIONS OFFICER
Guillermo Pérez
CHIEF CONTRACTS OFFICER
Víctor Orduña
CHIEF HUMAN RESOURCES OFFICER
Carmen Paz Urbina
CHIEF TECHNICAL OFFICER
Alejandro Gómez
CHIEF CORPORATE BUSINESSES OFFICER
Christian Mosqueira
CHIEF COMMERCIAL OFFICER
Alfredo Herrera
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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2. The board, on November 23, 2004, approved the
company’s new organizational structure.
Among the most important features was the appointment
of Christián Herrera Fernández as Chief Innovation and Human
Resources Officer (formerly Human Resources) and Enrique Fernández
Pérez as Chief Networks Management Officer (formerly Technical).
The board accepted the resignations of Alejandro Gómex Vidal as
Chief Technical Officer, Carmen Paz Urbina Sateler as Chief Human
Resources Officer and Jorge Faúndez Padilla as Chief Planning and
Control Officer.
The structure is as follows:
CHAIRMAN
Jorge Rosenblut
CHIEF EXECUTIVE OFFICER
Rafael López
LEGAL COUNSEL
Gonzalo Vial
CHIEF REGIONAL DISTRIBUTION OFFICER
Marcelo Silva
CHIEF INNOVATION AND HUMAN RESOURCES OFFICER
Cristián Herrera
CHIEF OPERATIONS AND MARKET MANAGEMENT OFFICER
Juan Camilo Olavarría
CHIEF COMMUNICATIONS OFFICER
Marcelo Castillo
CHIEF REGIONAL SERVICES OFFICER
Cristóbal Sánchez
CHIEF ECONOMIC AND CONTROL OFFICER
Juan P. Spoerer
CHIEF REGULATIONS AND ENERGY MANAGEMENT OFFICER
Guillermo Pérez
CHIEF LARGE CUSTOMERS OFFICER
CHIEF COMMERCIAL OFFICER
CHIEF NETWORKS MANAGEMENT OFFICER
Christian Mosqueira
Alfredo Herrera
Enrique Fernández
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239
OTH ERS
On January 28, 2004, the board agreed to call ordinary and
extraordinary shareholders’ meetings for March 25, 2004.
On March 9, 2004, the first notification of these meeting
was published in the El Mercurio newspaper. The second and third
notifications were made on March 15 and 18, 2004 respectively in
the same newspaper.
On March 9, 2004, notifications were sent to company
shareholders indicating the holding of these meetings and their
respective agendas.
• On March 26, 2004, the ordinary shareholders’ meeting resolved
on the following:
1. Approval of the annual report, financial statements, and reports
of the external auditors and inspectors of accounts for the year
ended December 31, 2003.
2. Distribution of dividends.
3. Explanation of the company’s dividend policy and information
on the procedures for the dividend distribution.
4. Proposed investment and financing policies.
The annual report for 2003 was sent on March 9, 2004 to the
5. Election of the board of directors.
shareholders and stock exchanges.
On March 9, 2004, the company’s financial statements were
published in the Diario Financiero newspaper.
6. Setting of the directors’ remuneration.
7. Setting of the Directors’ Committee remuneration and its
budget.
EN D ESA S. A . ( PARENT COMPANY)
8. Report of the Directors’ Committee.
• On February 4, 2004, Endesa, through its Agency, and CitibankN.
A., acting through its International Banking Facility, Caja Madrid
Miami Agency, Bank of Tokyo-Mitsubishi Ltd., Banco Bilbao
Vizcaya Argentaria S.A. (BBVA) and Banco Santander Central
Hispano, signed a syndicated loan agreement for US$250 million
with repayment at 3.5 years and a Libor margin of 1.15%. This
provided the company with a financial expense saving of US$5
million annually.
9. Appointment of the external auditors.
10. Election of two inspectors of accounts and their alternates and
setting of their remuneration.
In accordance with the indicatinos in point 5 of the meeting,
a new board of directors was appointed for the company wich is
comprised as follows:
The proceeds wee fully used to refinance the balance of a
syndicated loan signed in Mat 2003. The company at the same
time obtained the release of the guarantees given by Empresa
Eléctrica Pangue S.A., Empresa Eléctrica Pehuenche S.A. and
Compañía Eléctrica Tarapacá S.A. covering the previous loan,
and of borrowing and investments covenants.
This refinancing was part of a new stage in which the company
sought to optimize its financing costs and improve its debt
maturity profile following the successful execution of its Financial
Strengthening Plan in 2003.
• On February 27, 2004, the board agreed, in accordance with
the dividend policy for 2003, to propose to the company’s
ordinary shareholders’ meeting to be held on March 26, 2004,
the distribution of a final dividend of Ch$2.30 per share payable
on April 5, 2004.
Jaime Bauzá
Ignacio Blanco
Enrique García
Antonio Pareja
Luis Rivera
Andrés Regué
Carlos Torres
Antonio Tuset
Leonidas Vial
At an extraordinary board meeting held on the same day, it
was agreed to appoint Luis Rivera Novo as chairman and Antonio
Pareja Molina as vice chairman. The same meeting also appointed
the members of the Directors‘ Committee, these being Luis River
Novo, Jaime Bauzá Bauzá and Antonio Tuset Jorrat.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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PEH U EN CHE S. A .
• On March 25, 2004, the ordinary shareholders’ meeting approved
the financial statements for the year ended December 31, 2003.
That meeting also approved the board’s proposal to pay a final
dividend for 2003 for a total of Ch$28.85619 per share payable on
April 14, 2004.
• On June 24, 2004, the board agreed to distribute the first interim
dividend for the year 2004 amounting to Ch$9.042979 per share
payable on July 26, 2004, in accordance with the dividend policy
approved by the ordinary shareholders’ meeting.
• On October 8, Pehuenche reported that “during this week, certain
members of the CDEC-SIC have proceeded to issue invoices to the
company based on calculations made by the Operations Director of
the CDEC-SIC, in circumstances in which the board of that organism,
at its meeting EX - 9.2 – 2004 on October 4, 2004, adopted a
majority agreement to request the Minister of the Economy to clarify
doubtful points contained in Ministerial Resolutions 17 and 35 of
April 14 and June 15, 2004 respectively. This, taking into account that
there are manifest errors in the calculation made by the Operations
Director, by applying Resolution No.1 of the Panel of Experts, which
increased from 5 to 8 hours that period considered as carrying the
greatest probability of system load loss, including incorrectly in
this calculation Saturdays, Sundays and holidays which is clearly
contrary to that stated in the resolution referred to. The calculations
thus made with such manifest errors, and which we have objected
to, would amount to the payment by the company, for the period
2000 – 2003, of Ch$21,702,042,530.
In circunstances where the board of CDEC-SIC is awaiting the above
clarification, some companies proceeded to send invoices, based
on a manifestly mistaken calculation and which in addition to the
inclusion of the days mentioned not considered in the Resolution
No.1 of the Panel of Experts, contains manifest errors such as not
applying the unanimous agreement of the board that defined the
system’s peak period as five hours, at least until July 27, 2004,
when the difference was produced that was resolved by the Panel
of Experts. There are also errors such as the treatment of the water
levels and initial energies of reservoirs, the maximum capacity of
the Pehuenche plant and others that have been mentioned by other
generators.
The invoices have been rejected by the company based on current
legislation.
The board of CDEC-SIC should therefore pronounce on the calculations
and, in the event of not reaching agreement on the matter at their
meeting, this matter should be resolved by the Panel of Experts by
pronouncing with respect to the differences arising.
Considering the publicity given to this still unresolved matter in
the press today, the company has considered it appropriate to
advise its position on the matter because we are in no doubt
about the mistakes made in these calculations which we consider
as preliminary, and because we are confident that, by means of the
clarification that the authority might make or by that determined by
the Panel of Experts, pronouncing on the differences that will surely
come to your attention, there could be a more certain scenario
based on more realistic calculations coherent with the resolutions
issued on the matter.
The company will inform the market promptly of the development
of this unconcluded matter”.
• The company’s board, at an extraordinary meeting held on October
14, 2004, agreed to distribute to shareholders, in accordance with
the dividend policy advised to the shareholders’ meeting, a second
interim dividend amounting to Ch$18.444998 per share, payable
as from October 28, 2004.
•
In December 30, Pehuenche S.A. informed the SVS the following:
“The Board of Empresa Eléctrica Pehuenche S.A., at its meeting
today, unanimously agreed to change the dividend policy advised
to the company’s ordinary shareholders’ meeting held on March
25, 2004, with respect to the third interim dividend.
According to the dividend policy, the payment of the third interim
dividend considers the distribution of up to 70 % of net income
during the period January-November 2004, according to the
financial statements at November 30, 2004, less the amounts of
the first and second interim dividends paid in January 2005.
The decision adopted by the company’s board has given special
importance to the fact that to date the result of the re-calculation
that the Operations Director of the CDEC-SIC has to make is
unknown, regarding the calculations of transfers of peak capacity
between members of that organism, in the light of the recent
resolutions issued on the matter by the Panel of Experts and the
consequent impact in the results of Pehuenche S.A.. With prudence
and responsibility the board of the company therefore has thought
it appropriate to distribute 40 % of the net income for the period
January-November 2004, according to the financial statements at
November 30, 2004 less the amounts of the first and second interim
dividends paid on January 25, 2005. This means the distribution
of an interim dividend of Ch$1.885136 per share to shareholders
registered in the company’s shareholders register five business
days prior to the date planned for its payment.
All the above is notwithstanding the final dividend on which the
company’s ordinary shareholders’ meeting to be held in the first
four months of 2005 will decide.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
M A N A G E M E N T ’ S A N A LY S I S O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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241
It should be recalled that one of the good aspects of the
electricity business is its positive elasticity to economic growth, a
fact that has been confirmed in recent years in most of our concession
areas, as the accompany table shows.
ECO N OM IC-FI NAN CIAL SUM M ARY
Net income for 2004 was Ch$44,308 million, comparing
very favorably with a level of Ch$12,780 million in 2003. This result,
246.7% higher than the year before, is basically due to a 12.0%
increase in sales which led to a 15% improvement in operating income,
plus a 20.9% improvement in the non-operating result.
Operating income was Ch$634,202 million, Ch$84,704
million more than the year before. If, apart from business reasons,
we discount the effect of the Chilean peso revaluation during the year
(6.1%), the increase in operating income would be 22.1%.
It is important to note the better performance of the primary
business.
The 12.0% growth in sales confirms the sustained growth in
demand for energy related to a climate of more certain economic
recovery in most of the countries where the Enersis Group
operates.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
242
The principal considerations helping to explain the better result
are the following:
Generation Business
In Argentina, this reached Ch$34,379 million and represented
9% of Endesa Chile’s total. The Argentine operation showed a 30%
increase in sales as a result of the important growth in generation
and in energy demand.
Taking into account that our generation business is carried out
mainly by our subsidiary Endesa Chile, the following figures relate to
the consolidated results of that company.
Income before taxes and minority interest rose by 24.7% over
2003, the result of improved operating and non-operating results.
In Brazil, the subsidiary Cachoeira Dourada contributed 4% to
Endesa Chile’s operating income. As already mentioned, this reflected
the terms reached in concluding the company’s contractual dispute
with CELG. The physical generation of this subsidiary increased by 8%
due to stronger demand and favorable hydrology.
•
•
•
•
•
•
The reasons for this improved performance include:
The commercial start-up of the Ralco plant on Chile’s central
grid system, contributing a maximum capacity of 690 MW.
Adjustment of the node price from May, incorporating the
increased cost of thermal generation due to the gas restrictions.
Later, in the tariff-setting for the period November 2004-April
2005, the modification of the works plan was accepted which
included alternative technologies to natural gas.
The successful conclusion of commercial contractual disputes of
the Brazilian subsidiary, Cachoerira Dourada with its principal
customer, the Goiás state distribution company CELG.
Tariff adjustments in Argentina begun in February with a first
adjustment of the seasonal price for large users and commercial
customers, and a second one on November, continuing in
May and November respectively, with the transfer of the new
natural gas price to variable generating costs recognized by
the regulator. This increased the spot price.
Operating income in Colombia contributed 32% of the
overall income of Endesa Chile. Energy sales increased by 18% as a
consequence of firmer demand and good hydrology.
Operating income in Peru amounted to 14% of the company’s
consolidated income, with sales increasing by 8%. Although physical
sales were lower than in 2003 due to the poor hydrology in the zone,
the increase in prices following the rise in international fuel prices
compensated the fall in volume.
Endesa Chile’s non-operating result improved by 10%. Lower
financing expenses and larger gains from exchange differences
and price-level restatements were offset by higher non-operating
expenses as a result of the re-calculation of capacity payments in
Chile.
Taxes increased relating to a higher charge for income tax and
a rise in deferred taxes. The higher charge for deferred taxes was
recorded mainly in Argentina as a result of the significant devaluation
made as part of the country’s emergency plan.
Distribution
Increase in energy generating prices in Peru for the period
November 2004 –April 2005, showing a 19% increase in the
monomic price in dollars compared to the price set in May
2004.
This important line of business increased it operating income by
35%, from Ch$193,878 million to Ch$261,414 million, in line with the
reactivation in energy demand experienced in most of our concession
zones.
Record daily production of Endesa Chile in Latin America of
204,115 MWh (November), 13% higher than the previous record
daily level.
Aggregate physical energy sales (in distribution) of the Enersis
Group increased 5.5%, or 2,737 GWh, the equivalent of approximately
65% of the total annual sales of a subsidiary like Edelnor.
Consolidated revenues for 2004 increased by 9.5% over 2003
to Ch$1,032,662 million. Physical energy sales grew by 5.5% and the
average electricity sale price also rose.
Operating income in Chile represented 41% of Endesa Chile’s
consolidated operating income.
Sales growth by subsidiary was as follows:
•
•
Chilectra in Santiago, 7,6% growth following the “typical”
correlation in positive periods when electricity demand is
around two percentage points over GDP growth.
Edesur, in Buenos Aires, 5.3% increase that reflects the recovery
in activity in some sectors like commerce and residential.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
Edelnor, Lima, saw an increase of 7.1% in physical sales,
consistent also with the dynamism seen in the country’s growth
rate, in particular in our concession zone.
31:
The following table shows Enersis’s credit ratings at December
243
•
•
•
Cerj (Ampla) in the state of Río de Janeiro, with a 4.8% growth
in sales, while our other distribution subsidiary, Coelce, in
Fortaleza, increased sales by 4%.
Codensa, serving the city of Bogotá, was no exception and
showed growth of 4.3% in physical sales.
This growth is of major importance for our main business and
its projections and expectations in the short and medium term.
Remaining in the operating area, notable was the 4.2%
increase in number of customers, from 10,442,299 to 10,885,721,
thus signifying an increase of 443,422. This is an aspect of particular
importance when demand is growing at current rates.
Another important element in the operating field is labor
productivity in distribution. This improved by a significant 6.4%,
from 1,429 to 1,521 customers per employee.
Energy losses (aggregated for the companies) are another
key variable in the distribution business, slightly reducing from
12.2% to 11.9% mainly as a result of falls in Chilectra, Cerj (Ampla),
and Codensa. Notable was the reduction in losses of our Brazilian
subsidiary Cerj which declined from 23.2% to 22.8%, in line with our
expectations with respect to the technical and commercial efforts
made to improve this figure. This decline confirms the reducing trend
noted last September.
The Ch$290,474 million of increased sales were partially offset
by an additional Ch$202,876 million in cost of sales. The important
changes mentioned, with a net positive effect for the company, were
explained by greater levels of operating and commercial activity.
On the other hand, administrative and selling expenses increased
by 1.7%.
Non-Operating Result
As at the end of the third quarter, Enersis produced an improved
net financial result, this time of Ch$75,523 million, mainly due to the
sharp reduction in the company’s average debt level. The company
refinanced loans in 2004 to obtain a new interest margin one-tenth
of that paid during 2003. As already mentioned, this has enabled
Enersis to reach cost levels compatible with, or better even than,
international electricity utility companies rated as A.
INVESTMENT GRADE
Maximum grade
High grade
Very strong
Strong
Average high grade
Strong
Medium grade
Adequate
NON-INVESTMENT GRADE
Speculative elements
Major uncertainty
Undesirable
Unable to meet commitments
STANDARD
& POOR’S
FITCH
MOODY’S
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB- / Estable BBB- / Estable
BB+
BB
BB-
B+
B
B-
BB+
BB
BB-
B+
B
B-
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2 / Positive
Ba3
B1
B2
B3
The above refinancings permit Enersis now to have a debt
maturity profile more in line with the group’s cash generating
capacity, a situation much valued by the financial community.
The following graph shows the comparative position of average
consolidated financial debt of the Enersis Group at the close of the
last three years.
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Net income from investments in related companies also
benefited from the recovery and improved by 73.5%, an increase
of Ch$13,192 million, as detailed in the body of the management’s
analysis.
Other net non-operating income and expenses reflected a
higher charge of Ch$16,891 million, as shown in the analysis that
follows.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
244
The combination of improved operating and non-operating
results produced an extraordinary 219.1% growth in income before
tax, equivalent to Ch$182,332 million.
This large positive change was however offset by a large
jump of Ch$94,631 million in income tax over that of 2003, which is
explained in the following pages.
Market Information
Following the severe adjustments made throughout 2003
to improve Enersis’s financial situation and strengthen its equity
position, 2004 was, as expected, one of consolidation.
One of the best examples of the recovery in financial ratios
was the change in Enersis’s EBITDA. The following table shows its
strong growth, a factor normally followed by the market in analyzing
the company.
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The perception of risk also improved considerably, a factor duly
recognized by the international credit-rating agencies.
cost of bank borrowing and in the risk premium demanded on the
company’s bonds.
The improved ratings do no more than ratify the opinion of
a stock and financial market that pushed the share price upward
while risk margins continued to reduce considerably, both in the
The table below shows the recovery in the share price during
2004, supported also by strong liquidity, as is now habitual with
Enersis’s shares and ADRs.
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A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
245
This greater liquidity also explains why our securities show
the greatest sensitivity to investor decisions in the face of economic
or market conditions. For example, it is reasonable to estimate that
when investors perceive positive events leading them to increase their
regional or local exposure, they will demand positions in securities
with the greatest liquidity.
At December 31, the share price ended at Ch$93.66, signifying
a rise of 8.91% of the end of 2003. The ADR price reached US$8.51,
an increase of 15.63%.
The better perception of the company’s risk was appreciated
clearly in the lower financial cost for Enersis at the time of
renegotiating its debt. For example, in November, debt which the year
before had carried a cost of Libor + 350 basis points was refinanced
at Libor + 37.5 basis points. This shows a margin approximately one
tenth lower than the previous one.
The following table shows that the risk perceived by bond
holders has also improved, showing the confidence of debt holders
in Enersis’s capacity to pay on time and in form its contracted financial
commitments.
THE COMPANY’S M ARKE T
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A closer analysis of changes in the principal businesses is given
in the following pages, in the Comparative Analysis of the Financial
Statements, of the different items of the statement of income,
balance sheet and principal cash flows, compared to information
at December 31, 2003.
The business activities of Enersis are carried out through subsidiary companies that operate in different businesses in the countries
in which it has a presence. The most relevant businesses of Enersis are electricity generation and distribution.
The following table shows comparisons of key indicators in the different countries:
Distribution Business
Company
Chilectra
Edesur
Edelnor
Cerj
Coelce
Codensa
Total
Energy Sales
(GWh) (*)
Energy Losses
(%)
Customers
(thousands)
Customers per
Employee
dec-03
10,518
12,656
3,968
7,276
5,905
9,254
dec-04
11,317
13,322
4,250
7,628
6,141
9,656
dec-03
5.6%
11.8%
8.4%
23.6%
13.5%
10.2%
dec-04
5.2%
11.8%
8.4%
22.8%
13.9%
9.7%
dec-03
1,341
2,117
892
2,012
2,109
1,972
dec-04
1,371
2,139
912
2,115
2,334
2,015
49,577
52,314
12.2%
11.9%
10,443
10,886
dec-03
1,800
938
1,610
1,326
1,534
2,298
1,429
dec-04
1,981
939
1,680
1,502
1,746
2,236
1,521
* Includes sales to end customers, tolls and intercompany sales.
Generation Business
Energy Sales(GWh)
Market share in sales
Country
Chile
Argentina
Perú
Colombia
Brazil
Market
SIC y SING
SIN
SICN
SIN
SICN
Total
dec-03
18,681
9,259
4,443
14,481
3,770
dec-04
18,462
11,604
4,328
15,148
3,902
50,633
53,443
dec-03
43.9%
11.9%
25.3%
22.2%
1.0%
dec-04
40.3%
14.0%
23.3%
23.3%
1.2%
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
246
I. ANALYSIS O F THE FI NANCIAL STATEMENTS
1. Analysis of the Statement of Income
At December 31, 2004, the company had a net income of
Ch$44,308 million, representing an increase of Ch$31,528 million,
equivalent to 247% compared to 2003 when the figure was Ch$12,780
million.
The increase is mainly due to higher operating income and
lower financial expenses, partially offset by the increase in taxes. The
following table provides a comparison of each item in the statement
of income.
Statement of Income (millions of Ch$)
Sales
Cost of sales
Operating margin
Admin. & selling expenses
Operating income
Income (loss) on investments in related companies
Non-operating income & expenses, net
Financial margin, net
Amortization goodwill
Price-level restatements
Exchange differences
Non-operating result
Income before taxes
Income tax
Extraordinary items
Minority interest
Amortization negative goodwill
Net income for the year
EBITDA (*)
Earnings per share
dec-03
2,418,451
(1,695,212)
723,239
(173,741)
549,498
17,955
(56,832)
(362,027)
(54,559)
(4,612)
(6,206)
(466,281)
83,217
(42,610)
Dec-04
Change Dec 04-03
% change Dec 04-03
2,708,925
(1,898,088)
810,837
(176,635)
634,202
31,145
(73,723)
(286,504)
(53,201)
(777)
14,407
(368,653)
265,549
(137,241)
290,474
(202,876)
87,598
(2,894)
84,704
13,190
(16,891)
75,523
1,358
3,835
20,613
97,628
182,332
(94,631)
12.0%
(12.0%)
12.1%
(1.7%)
15.4%
73.5%
(29.7%)
20.9%
2.5%
83.2%
332.2%
20.9%
219.1%
(222.1%)
-
-
-
-
(80,283)
52,456
12,780
1,040,675
0.39
(101,107)
17,107
44,308
1,138,905
1.36
(20,824)
(35,349)
31,528
98,230
0.97
(25.9%)
(67.4%)
246.7%
9.4%
246.7%
(*) Income before taxes, interest, depreciation, amortization & extraordinary items.
a) Operating income:
Operating income in 2004 showed a rise of Ch$84,704 million
over 2003, to Ch$634,202 million, representing an increase of 15.4%.
This is mainly the result of strong increases in operating income in
the generating subsidiaries in Colombia, Brazil and Argentina and
the distribution subsidiaries in Colombia and Argentina.
Taking away the effect of the revaluation of the Chilean peso
against the US dollar of 6.1% during the year (from Ch$593.80 to
Ch$557.40 per US$1), the operating income increased by 22.1%.
In Generation, the operating income of our subsidiary Endesa
Chile for 2004 was Ch$369,025 million, a 6.4% increase of Ch$22,052
million compared to the year before. This improved operating income
is due to the better results of the subsidiaries in Colombia, Brazil
and Argentina which were partly offset by weaker results in Chile
and Peru. Sales in 2004 reached 53,443 GWh, an increase of 5.5%
over 2003.
In Colombia, the subsidiaries Emgesa and Betania showed
increases in their operating income of Ch$18,333 and Ch$11,990
million respectively to levels of Ch$100,903 million and Ch$17,553
million. This is the result of firmer demand in the local market and
good hydrology during the year, which translated into an increase
in energy sales in Colombia of 17.6%. Physical sales increased by
667 GWh and generation by 1,087 GWh, with a lower contribution
by thermal generation. This allowed a reduction in energy purchases
and in fuel costs compared to the previous year. Eliminating the effect
of the variation in the Chilean peso exchange rate, the increase in
operating income of Emgesa and Betania would be Ch$24,572 and
Ch$13,171 million.
In Brazil, the subsidiary Cahoeira Dourada produced an
operating income of Ch$14,314 million, 281.8% (Ch$10,565 million)
more than in 2003. This demonstrates the progress made in the
agreements signed in 2004 with its principal customer CELG. Sales
increased by 33.1% to Ch$42,006 million and the physical generation
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
247
increased by 7.9% as a result of increased demand and the favorable
hydrology in the zone. Eliminating the effect of the variation in the
Chilean peso exchange rate, the increase in operating income would
be Ch$10,881 million.
In Argentina, operating income in 2004 was Ch$34,379
million, an increase of 3.8% (Ch$1,258 million) over 2003 when the
figure was Ch$33,121 million. Sales increased by an impressive 30%
to Ch$148,300 million due to the large increase in generation and
energy demand. The higher physical sales of the subsidiary Central
Costanera, which grew by 74% over 2003, influenced by the ability of
the Costanera plant to operate not only with natural gas but with fuel
oil, were partially offset by reduced sales by El Chocón due to the low
hydrology in the Comahue zone. Thermal generation’s participation
in Costanera’s output grew from 50.3% to 70.4%, causing the cost
of sales in Argentina to increase by 41.0% to Ch$111,352 million in
2004. The cost of fuel rose by 237.6% because of the natural gas
restrictions in the Argentine market which led Costanera to increase
its generation with liquid fuels. Eliminating the effect of the variation
in the Chilean peso exchange rate, the increase in operating income
of Costanera and El Chocón would be Ch$3,129 and Ch$768 million
respectively.
In Chile, operating income in 2004 was Ch$149,718 million, a
decline of Ch$9,423 million with respect to 2003. This is the result of
a higher variable cost of sales that had to be assumed resulting from
the greater use of thermal generation in the first half of the year due
to relatively poor hydrology in the zone. This situation improved in
the second half of the year thus increasing hydroelectric generation,
principally with the entry to the SIC of the Ralco hydroelectric
plant.
In Peru, the operating income of the subsidiary Edegel was
Ch$52,158 million, compared to Ch$62,829 million in 2003, a
reduction of 17.0%. Sales increased by 7.7% (Ch$8,843 million) to
Ch$123,375 million. Physical sales were lower than in 2003 because
of the low hydrology in the zone. This also led to a price increase,
affected as well by the increase in international fuel prices, which
helped to compensate the reduced physical sales. However, the
lower hydrology also affected the company’s cost of sales which
increased by 44.6% over 2003, to Ch$63,779 million. Edegel’s
physical generation of electricity fell by 3.9% to 4,285.2 GWh.,
with hydroelectric production falling by 408.4 GWh and thermal
increasing by 235.2 GWh. This implied higher fuel costs and larger
energy purchases. Eliminating the effect of the variation in the Chilean
peso exchange rate, the reduction in operating income would be 8.5%
(Ch$5,381 million).
In Distribution, the Group subsidiaries continued to produce
increases in physical sales and number of customers; the former
showed an increase of 2,737 GWh, the equivalent of 5.5%, to 52,314
GWh, and the number of customers increased by 4.2% (443,000)
to 10.9 million.
In Colombia, the subsidiary Codensa produced an increase in
its operating income of Ch$53,066 million to a total of Ch$84,449
million in 2004. This increase was mainly due to a better unit
margin following a tariff increase and greater energy demand;
this translated into an increase in physical energy sales of 4.3% to
9,656 GWh. Eliminating the effect of the variation in the Chilean
peso exchange rate, the increase in operating income would be
Ch$55,709 million.
In Chile, the subsidiary Chilectra reported an increase in
operating income for 2004 of Ch$2,236 million to Ch$97.611 million.
This was mainly due to increased sales of Ch$38,203 million as a result
of the 7.6% increase in physical sales equivalent to 799 GWh. This was
partially offset by an increased cost of sales of Ch$28,858 million
following greater purchases of energy and a greater depreciation
of fixed assets, as well as an increase in administrative and selling
expenses of Ch$7,109 million, mainly due to the extraordinary
severance payments made early in the year and higher operating
and maintenance costs.
In Peru, the subsidiary Edelnor increased its operating income
by Ch$628 million to Ch$27,825 million. This increase was mainly due
to lower administrative and selling expenses and greater physical
sales, partially offset by a smaller sales margin caused by purchases
at a higher price. Physical energy sales increased by 282 GWh, from
3,968 GWh in 2003 to 4,250 GWh. Eliminating the effect of the
variation in the Chilean peso exchange rate, the increase in operating
income of Edelnor would have increased by Ch$2,918 million.
In Brazil, the distribution subsidiaries Cerj and Coelce produced
operating income of Ch$46,893 and Ch$4,890 million respectively.
Cerj showed an increase of Ch$21,767 million and Coelce a reduction
of Ch$15,286 million. In the case of Cerj, the increase was the result of
a greater sales margin following a tariff adjustment, higher physical
energy sales which increased by 352 GWh and a reduction in energy
losses from 23.6% at December 2003 to 22.8% in 2004. In Coelce,
the reduction was due to higher energy purchase costs, an increase
in energy losses from 13.5% to 13.9%, partially offset by the tariff
increase and a 236 GWh increase in physical sales. Eliminating
the effect of the variation in the Chilean peso exchange rate, the
operating income of Cerj would have increased by Ch$23,882 million
and of Coelce decreased by Ch$13,587 million.
In Argentina, our subsidiary Edesur improved its operating
result by Ch$5,125 million, passing from a loss of Ch$5,378 million
in 2003 to one of Ch$253 million in 2004. This is mainly the result
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
248
of the country’s demand for energy which has led to a 5.3% increase in physical sales, from 12,656 GWh to 13,322 GWh. Eliminating the
effect of the variation in the Chilean peso exchange rate, the operating income increases by Ch$4,673 million.
Sales, cost of sales and administrative and selling expenses of the Enersis Group subsidiaries for the years 2004 and 2003 are as
follows:
Operating Results detail (millions of Chilean pesos)
December 2003
December 2004
Company
Endesa S. A.
Chilectra S. A.
Edesur S. A.
Edelnor S. A.
Cerj
Coelce
Codensa S. A.
Cam Ltda.
Inmob. Manso de Velasco Ltda.
Synapsis Soluc.y Servicios Ltda.
Enersis parent & invest. Companies
Sales
Cost of Sales
Admin.
& Selling
Expenses
Operating
Result
Sales
Cost of Sales
943,288
(564,208)
(32,107)
346,973
1,032,662
(629,191)
444,803
(314,129)
188,541
(165,195)
180,346
(135,623)
325,533
(289,209)
212,572
(162,022)
299,459
(250,770)
94,011
11,617
46,415
4,440
(73,624)
(10,764)
(31,089)
(35,299)
(28,724)
(17,526)
(11,198)
(30,374)
(17,306)
(6,305)
(1,733)
(6,369)
95,375
(5,378)
27,197
25,126
20,176
31,383
14,082
(880)
8,957
483,006
(342,987)
208,983
(181,425)
182,363
(137,720)
354,638
(293,145)
264,358
(229,674)
365,513
(273,375)
100,424
(84,077)
10,354
45,447
4,448
(8,432)
(33,363)
Admin.
& Selling
Expenses
(34,446)
(42,408)
(27,811)
(16,818)
(14,600)
(29,794)
(7,689)
(7,113)
(2,008)
(6,084)
Operating
Result
369,025
97,611
(253)
27,825
46,893
4,890
84,449
9,234
(86)
6,000
(14,187)
(1,158)
(17,443)
(14,161)
(1,102)
(17,533)
Consolidation adjustments
(332,574)
302,579
30,643
648
(343,271)
316,403
29,669
2,801
Total Group
2,418,451
(1,695,212)
(173,741)
549,498
2,708,925
(1,898,088)
(176,635)
634,202
Operating Result by Business Area
Sales and cost of sales, by business area, for the years 2004 and 2003:
Operating Result by Business Area
Years ended December 31, 2004 and 2003
Generation
Distribution
Engineering & Real
Estate
Head Office & other
services
Eliminations
Total
Business
Sales
Cost of sales
Operating margin
dic-03
dic-04
dic-03
dic-04
dic-03
dic-04
dic-03
dic-04
dic-03
dic-04
dic-03
dic-04
918,634 1,012,305
1,651,253 1,858,860
36,272
30,711
144,867
150,320
(332,575)
(343,271)
2,418,451 2,708,925
(543,006)
(611,808)
(1,316,948)
(1,458,325)
(31,966)
(25,816)
(105,871)
(118,542)
302,579
316,403
(1,695,212)
(1,898,088)
375,628 400,497 334,305 400,535
4,306
4,895
38,996
31,778
(29,996)
(26,868) 723,239 810,837
Admin. & selling expenses
(31,018)
(33,003)
(140,427)
(139,121)
(2,822)
(3,449)
(30,118)
(30,731)
30,644
29,669
(173,741)
(176,635)
Operating result
344,610 367,494
193,878 261,414
1,484
1,446
8,878
1,047
648
2,801
549,498 634,202
b) Non-Operating Result
The company’s non-operating result improved by 20.9%
(Ch$97,628 million), passing from a loss of Ch$466,281 million in
2003 to one of Ch$368,653 million. This was mainly due to lower
financial expenses, the effects of exchange differences and income
on investments in related companies.
Financial expenses less financial income reduced by Ch$75,523
million, passing from a net expense of Ch$362,027 million in 2003
to one of Ch$286,504 million in 2004, a reduction of 20.9%. The
decline in financial expenses is mainly the result of a lower level
of average debt and lower interest rates obtained through the
refinancing agreements.
Income on investments in related companies increased
by 73.5% (Ch$13,190 million), passing from income of Ch$17,955
million in 2003 to income of Ch$31,145 million. This is mainly due
to the income recorded in 2004 by the associate company Central
Generadora de Fortaleza (CGTF) of Ch$11,857 million which entered
into operations in early 2004 and the improved result in Inversiones
Gas Atacama Holding Ltda. of Ch$6,486 million, partially offset by
reduced income from Cía. de Interconexión Energética (CIEN) of
Ch$4,975 million.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
249
Amortization of goodwill shows no significant change, being
a reduction of 2.5% to Ch$53,201 million. The reduced amortization
was produced by the effect of the Chilean exchange rate on foreign
subsidiaries controlled in dollars and which have goodwill.
Income tax and deferred taxes. There was a higher charge
at December 31, 2004 of Ch$94,631 million compared to 2003,
passing from a tax charge of Ch$42,610 million to one of Ch$137,241
million.
Other non-operating income and expenses (net) show a
greater expense of Ch$16,891 million, passing from a net expense
of Ch$56,832 million in 2003 to one of Ch$73,723 million. The main
reasons for this change are the following:
INCOME TAX AND DEFERRED TAXES
Concept
Dec 03
Ch$ millions
Dec 04
Ch$ millions
Change
Ch$ millions
Income tax
Deferred taxes
(103,272)
60,662
(90,712)
(46,529)
12,560
(107,191)
Lower gains on sales of investments of Ch$84,677 million.
Total
(42,610)
(137,241)
(94,631)
•
•
•
•
•
•
•
•
•
Higher net expenses due to the re-calculation of capacity on
the SIC for Ch$12,549 million.
Higher charge for tax on equity in Colombia (of 1.2% and
applicable to all companies in that country) amounted to
Ch$4,488 million.
Net losses on derivate instrument contracts of Ch$5,240
million.
Lower dividends from associate companies of Ch$2,434
million.
The above was partially offset by:
Lower losses of Ch$12,252 million from the conversion
adjustment to Chilean regulations, in accordance with Technical
Bulletin No.64, principally of the subsidiaries in Brazil. This
was mainly produced by the appreciation of the Brazilian
real against the US dollar during 2003 and its impact on the
monetary assets and liabilities structure.
Lower charge for provisions for lawsuits and contingencies of
Ch$56,225 million.
Lower pension fund charges in Brazil of Ch$16,182 million.
Indemnity received by Edesur from Alstom-Pirelli with respect
to the Azopardo substation, for Ch$7,657 million.
Price-level restatements and exchange differences show a
net positive change in 2004 of Ch$24,448 million compared to the
year before, passing from a loss of Ch$10,818 million to a gain of
Ch$13,630 million. This arose mainly from the effects of having an
asset position in the first half year when the dollar was at its peak for
the year, passing to a liability position when the dollar fell, reaching
a Chilean peso revaluation against the dollar at December 31, 2004
of 6.1%. The year before, the peso revaluation was 17.4% which
negatively affected the position we held during that year.
The reduction of Ch$12,560 million in income tax is mainly
explained by the fact that 2003 included the tax on the gain on the
sales of investments in Río Maipo, Canutillar and Infraestructura 2000
of Ch$23,120 million. This was partially offset by the tax charge for
this year due to the better taxable profits, mainly in the subsidiaries
Codensa and Emgesa for Ch$6,452 and Ch$8,749 million respectively
and the subsidiaries Edelnor and Cerj for Ch$3,400 and Ch$3,247
million respectively.
With respect to deferred taxes, which do not represent cash
flow, these show a negative change of Ch$107,191 million, mainly due
the generating subsidiaries in Argentina (Costanera and El Chocón)
for Ch$47,961 million. This occurred as they recorded for the first time
in June 2003 the effects of the companies’ tax losses (mainly the
devaluation of the Argentine peso) at that date (Ch$24,332 million
of gain from deferred taxes), the gain from deferred taxes increasing
in the second half by Ch$9,601 million to reach Ch$33,933 million of
gain at December 31, 2003. However, as a result of the recovery in
the exchange rate and the companies’ improved results, the tax loss
has diminished and produced losses of Ch$14,028 million from the
reversal of deferred taxes. Other companies producing large increases
in the charge for deferred taxes were Cerj for Ch$27,783 million,
Enersis for Ch$12,889 million, Edelnor for Ch$5,150 million, Endesa
Chile for Ch$8,362 million and Edegel for Ch$5,352 million.
Amortization of negative goodwill. This amounted to Ch$17,107
million in 2004, a fall of Ch$35,349 million compared to 2003. This
was due to the acceleration of the amortization in 2003 that was
generated by the investment made in Cerj early that year.
Exchange and Interest Rate Risk Analysis
The company has a high proportion of its loans denominated
in US dollars as most of its sales in the different markets where it
operates have a high degree of indexation to that currency. However,
the Brazilian and Colombian markets are less related to the dollar so
the subsidiaries in those markets have more debt in local currency. In
the case of Argentina, an important proportion of sales comes from
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
250
the export of energy to Brazil which is indexed to the dollar which
reduces the exchange risk exposure in that country.
Despite this natural cover for the exchange rate, the company,
in a scenario of high dollar volatility, has continued with its policy
of partially hedging its dollar liabilities in order to attenuate the
fluctuations caused to the results by changes in the exchange rate.
In view of the important reduction in the accounting mismatch in
recent years, which have reached prudent levels, the company has
amended its dollar-peso hedging policy and established a cash-flow
hedging policy together with a maximum accounting mismatch limit
over which hedging transactions should be carried out.
At December 31, 2004, the company in consolidated terms
has cover in Chile, through dollar-UF swaps, an amount of US$700
million, compared to US$219 million in forward cover contracts (for
the sale of US$) at the end of 2003. The change is mainly due to the
amendment to the hedging policy mentioned above.
With respect to interest rate risk, the company has, in
consolidated terms, a rate of fixed to floating rate debt of
approximately 83.7% / 16.3%. The fixed-rate percentage has declined
compared to the 99% / 1% ratio the year before.
The following shows the operating results by country for the
years 2004 and 2003:
Chile
Argentina
Brazil
Peru
Colombia
Total
Country
Sales
% consolidated total
Cost of sales
% consolidated total
Operating margin
% consolidated total
Admin. & selling expenses
% consolidated total
dec-03
883.093
37%
(560.210)
33%
dec-04
872.542
32%
(543.231)
29%
322.883 329.311
41%
(70.665)
40%
45%
(62.055)
36%
dec-03
299.651
12%
(236.978)
14%
62.673
9%
(30.750)
18%
dec-04
363.389
13%
(294.638)
16%
68.751
8%
(29.412)
17%
dec-03
564.369
23%
(475.978)
28%
dec-04
660.679
24%
(551.584)
29%
88.391 109.095
13%
(43.175)
24%
12%
(39.611)
23%
dec-03
255.971
11%
(146.068)
9%
dec-04
279.721
10%
(178.432)
9%
109.903 101.289
12%
(21.387)
12%
15%
(20.910)
12%
dec-03
415.367
17%
(275.978)
16%
dec-04
532.594
20%
(330.203)
17%
139.389 202.391
25%
(11.996)
7%
19%
(20.415)
12%
dec-03
dec-04
2.418.451 2.708.925
(1.695.212)
(1.898.088)
723.239 810.837
(173.741)
(176.635)
Operating result
260.828 258.646
31.923
39.339
48.780
65.920
88.993
79.902
118.974 190.395
549.498 634.202
Others
As is normal practice with bank loans and also in the capital
markets, a substantial portion of the financial debt of Enersis is
subject to cross-default clauses. Certain defaults by Endesa-Chile or
its subsidiaries, if not remedied within a certain time period (where
the specific clauses allow a period for remedying problems), could
result in a cross default at the level of Endesa-Chile and Enersis.
equivalent jointly of US$30 million or more, and enforceable
court resolutions whose content is different from the payment
of a money obligation against Enersis, Endesa-Chile or any of
their respective subsidiaries that could have a substantially
adverse effect on Enersis consolidated or Endesa-Chile
consolidated, as the case may be.
The detail of defaults of Enersis or its subsidiaries which, if not
remedied in time, could result in a cross default at the level of Enersis
and/or its subsidiaries are:
•
•
•
•
Non-payment of principal or interest on the corresponding
debt.
Non-payment of debt of Enersis S.A., Endesa-Chile or by any
of their respective subsidiaries for an amount of more than
US$30 million (considered on an unconsolidated basis) when
due (whether the maturity date or by debt acceleration).
Bankruptcy or cessation of payments by Enersis, Endesa-Chile
or any of their respective subsidiaries.
Court resolutions enforced against Enersis, Endesa-Chile or any
of their respective subsidiaries that imply an obligation for the
•
•
Government action whereby all or a substantial part of
the ownership or assets of Enersis, Endesa-Chile or certain
subsidiaries are nationalized, embargoed, expropriated or
government actions are taken that could prevent the continuity
of the operations or a substantial part of them, of Enersis,
Endesa-Chile or certain subsidiaries.
Non-compliance with contract clauses that are not remedied
within the set grace periods such as the commitment to
maintain certain debt and interest coverage ratios.
In most of the loans, and in general terms, the term subsidiary
refers to those of a relevant nature in Chile or abroad.
The liabilities that could be payable on demand in each default
and the respective creditor subsidiary is detailed as follows:
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
251
Bank Loans
International Yankee bonds
Amounts in US$ millions at December 31, 2004
Amounts in US$ at December 31, 2004
Enersis
Endesa Chile
Total
Sindicated
350
250
600
Total
350
250
600
Enersis
Endesa Chile
Total
Yankee bond
901
2,016
2,917
Potentially Active Events of Default in Subsidiaries that
would generate a cross-default to the parent company.
Potentially Active Events of Default in Subsidiaries
(triggering cross-default to the parent company).
Enersis
Effect on the Parent
1. Default Debt >=US$30 MM
2. Bankruptcy or cessation of
payments
3. Substantial Adverse Effect
Defaults
4. Governmental Action
Endesa
Effect on the Parent
1. Default Debt >=US$30 MM
2. Bankruptcy or cessation of
payments
3. Substantial Adverse Effect
Defaults
3. Governmental Action
US$350 million
Parent only affected by annotated
causes if occurring in the Relevant
Subsidiaries. Defaults in other
subsidiaries have no effect on the
Parent. The Relevant Subsidiaries
are qualified on the basis of
financial statements for the last
year under US GAAP. On the basis
of the financial statements at
December 31, 2003, the Relevant
Subsidiaries are Enersis, Endesa
Chile, Cerj, Chilectra and Cono
Sur.
US$250 million
Parent only affected by annotated
causes if occurring in the Relevant
Subsidiaries. Defaults in other
subsidiaries have no effect on the
Parent. The Relevant Subsidiaries
are qualified on the basis of
financial statements for the last
year under US GAAP.
On the basis of the financial
s tatement s at December 31,
2003, the Relevant Subsidiaries
are C.E Cono Sur, Endesa Chile
Internacional, Betania, Pehuenche,
Pangue, C.E. Tarapacá, Edegel,
Cachoeira Douradad and Lajas
Inversora.
Notes:
1) Unconsolidated Debt
2) Nationalization, expropriation, dissolution, etc..
Enersis
1. Default Debt >=US$30 MM Default on debt of Enersis or a
Subsidiary. The Subsidiaries of
Enersis that at the date indicated
have third-par ty debts of over
US$30 million are: Cerj, Endesa,
B e ta n i a, C e n t r a l C o s ta n e r a,
Codensa, Colece, Edegel, Edelnor,
Emgesa, Endes Chile Internacional,
Pehuenche and San Isidro.
In Enersis or one of its Significant
S u b s i d i a r i e s , B a s e d o n t h e
financial statements at 31.12.2003,
Significant Subsidiaries are Enersis,
Cerj, Chilectra, Endesa Chile and Luz
de Bogotá.
2 . S t a r t o f b a n k r u p t c y
proceedings
Endesa
1. Default Debt >=US$30 MM
2 . S t a r t o f b a n k r u p t c y
proceedings
Notes:
(1) Only at the unconsolidated level.
Default on debt of Endesa or a
Subsidiary. The Subsidiaries of
Endesa that at the date indicated
have third-party debts of over
US$30 million are: Betania, Central
Costanera, Edegel, Emgesa, Endes
Chile Internacional, Pehuenche and
San Isidro.
In Endesa or one of its Significant
S u b s i d i a r i e s , B a s e d o n t h e
financial statements at 31.12.2003,
Significant Subsidiaries are Central
Costanera, Cono Sur, Edegel,
Emgesa, Endesa Colombia, Pangue
and San Isidro.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
252
Domestic Bonds
Amounts in US$ millions at December 31, 2004
Enersis
Endesa Chile
Total
Domestic bonds
61
514
575
The Enersis bonds have cross-default with its own debt that exceeds 3% of assets.
Potentially Active Events of Default in Subsidiaries
(triggering cross default with the Parent)
Endesa Chile
1. Insolvency or inability to pay debts
2. Default Debt >= UF 2 million
3. Start of bankruptcy proceedings
(amounts affected US$ millions in brackets)
2. Balance Sheet Analysis
Important subsidiaries
Subsidiaries
Cono Sur
Yes (Ch$482)
No
Yes (Ch$482)
Rest of subsidiaries
Yes (Ch$32)
No
No
The company’s total assets reduced by Ch$475,368 million compared to the end of the previous year, mainly because:
Assets
Assets (millions of Ch$)
Current assets
Fixed assets
Other assets
Total assets
dec-03
1,156,481
8,298,769
1,527,643
dec-04
1,519,081
7,684,822
1,303,622
362,600
(613,947)
(224,021)
10,982,893
10,507,525
(475,368)
31.4%
(7.4%)
(14.7%)
(4.3%)
Change 04-03
% Change 04-03
The reduction in fixed assets (property, plant and equipment)
of Ch$613,947 million (7.4%) was mainly due to depreciation for the
year of Ch$379,491 million and the effect of the exchange rate on the
fixed assets of foreign companies as a result of the methodology of
carrying non-monetary assets in historic dollars, in accordance with
Technical Bulletin No.64, affecting subsidiaries domiciled in unstable
countries. This was partially compensated by new acquisitions of
Ch$265,934 million.
Current assets increased by Ch$362,600 million, mainly due to:
•
Increase in cash and banks of Ch$29,465 million and time
deposits of Ch$188,083 million mainly because of greater
placements by Codensa of Ch$152,564 million to cover a
future capital reduction, and in Endesa Chile and Betania
of Ch$33,258 and Ch$16,327 million respectively in cash
surpluses offset by reduced placements by Emgesa and Chocon
of Ch$13,541 and Ch$10,343 million respectively held for the
payment of dividends.
•
•
•
Higher short-term accounts receivable from related companies,
of $96,899 million, basically because of the maturity during
the year of the loan to Atacama Finance of Ch$104,134 million,
partially compensated by lower receivables from Gas Atacama
of Ch$2,681 million, Cemsa of Ch$1,874 million and Cien of
Ch$1,049 million.
Increase in accounts receivable of Ch$49,890 million, mainly
higher invoicing of the subsidiaries Codensa Ch$17,647
million, Chilectra $6,395 million, investluz $6,173 million
Emgesa Ch$5,291 million, Cerj Ch$4,167 million and Edelnor
Ch$4,055 million, partially offset by Cachoeira Dourada where
receivables fell by Ch$7,379 million.
Increase in recoverable taxes of Ch$34,819 million, mainly
by Elesur for Ch$56,363 million and Codensa for Ch$15,596
million, partially offset by reductions in Enersis of Ch$14,844
million, Cerj of Ch$11,895, Endesa of Ch$9,682 million and
Coelce of Ch$2,904 million.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
253
•
•
•
Increase in prepaid expenses of Ch$28,147 million, mainly
in Cerj and Investluz of Ch$21,704 and Ch$3,215 million
respectively, for the regulatory assets and Parcel A.
Reduction in other current assets of Ch$39,660 million, mainly
the result of a decline in forward contracts and agreements for
Ch$21,901 million, smaller deposits in guarantee of Ch$8,953
million and less deferred credits of Ch$4,163 million.
Reduction in other accounts receivable of Ch$32,735 million,
mainly the result of the payment of OHL of Ch$38,730 million
for Infraestructura 2000 and less advances to suppliers in
Codensa of Ch$4,023 million, partially offset by the re-
calculation of capacity on the SIC of Ch$17,572 million.
Other long-term assets showed a reduction of Ch$224,020
million, mainly due to:
•
•
•
•
Fewer accounts receivable from related companies of
Ch$131,875 million, basically because of the transfer to current
assets of the loan to Atacama Finance of ch$131,875 million
and part payment of that loan.
Reduction in goodwill of Ch$66,372 million mainly due to
amortization in 2004 of Ch$53,201 million. The difference is
the result of the Chilean exchange rate with respect to goodwill
in subsidiaries controlled in dollars.
Reduction in investments in other companies of Ch$86,804
million, basically the investment in Empresa Electrica de Bogota
following the liquidation of Luz de Bogota, transferring its
holding to minority interests.
Reduction on other long-term assets of Ch$59,843 million
following a reduction in deferred loan commissions and
expenses of Ch$46,527 million, less the effects of the marking
to fair value of derivatives of Ch$23,070 million and a reduction
in post-retirement benefits of Ch$5,184 million, all partially
offset by an increase in bond expenses and discounts of
Ch$11,161 million.
The company’s total liabilities show a reduction of Ch$475,368 million compared to the end of the previous year, for the following
reasons
Liabilities
Liabilities (millions of Ch$)
Current liabilities
Long-term liabilities
Minority interest
Shareholders’ equity
dec-03
1,155,330
3,782,448
3,433,014
2,612,101
dec-04
1,018,811
3,804,155
3,125,006
2,559,553
Change 04-03
% Change 04-03
(136,519)
21,707
(308,008)
(52,548)
(11.8%)
0.6%
(9.0%)
(2.0%)
Total liabilities & shareholders’ equity
10,982,893
10,507,525
(475,368)
(4.3%)
Short-term liabilities reduced by 11.8% (Ch$136,519 million)
•
due to:
•
•
•
Reduction in short-term, and current portion of long-term,
borrowings from banks of Ch$128,037 and Ch$62,896 million
respectively resulting from the prepayments made by Edesur
of Ch$63,284 million and by Codensa of Ch$82,340 million.
Reduction in other current liabilities of Ch$16,609 million,
mainly the result of a decline in derivative contracts and their
fair value of Ch$29,680 million.
Increase in short-term bonds payable of Ch$34,365 million
following the transfer to short term of Edegel bonds for
Ch$22,733 million and of Cerj for Ch$16,522 million.
Increase in accounts payable of Ch$32,172 million, mainly
Endesa for Ch$21,023 million and Edesur for $11,956 million.
Long-term liabilities increased by Ch$21,707 million (0.6%)
basically due to an increase in bonds payable of Ch$136,723
million, issued to prepay bank debt.
•
•
Increase in other long-term liabilities of Ch$57,348 million,
mainly the result in Enersis of recording the fair value of
derivative instruments taken.
Increase in long-term deferred taxes of Ch$56,340 million,
mainly Endesa and Edelnor for Ch$39,396 and Ch$14,805
respectively.
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
254
•
Reduction in bank borrowings by Ch$228,630 million following
the prepayments made from surplus cash and bond issues.
The minority interest fell by Ch$308,008 million due to the
increased holdings in Cerj and Costanera and the liquidation of
Luz de Bogotá, plus the effect of the reduction in capital of foreign
subsidiaries controlled in dollars, in accordance with Technical Bulletin
No.64.
With respect to shareholders’ equity, this fell by Ch$52,548
million compared to December 2003, explained mainly by the
reduction in other reserves of Ch$96,275 million caused by the
revaluation of the Chilean peso and its effect on equity through the
adjustment for conversion differences of investments controlled in
dollars. This was partially offset by the increase in retained earnings
of Ch$13,961 million and the improved net income for the year of
Ch$31,528 million.
The principal financial indicators are as follows:
Comparison of the Principal Financial Indicators
Liquidity
Indicator
Current ratio
Acid test (1)
Working capital
Debt
Debt ratio
Short-term debt
Long-term debt
Financial expense coverage (2)
times
Profitability
Return on equity
Return on assets
(1) Current assets less inventories and prepaid expenses
(2) EBITDA divided by financial expenses.
%
%
Unit
times
times
dec-03
dec-04
Change Dec 04-03
% Change 04-03
1.00
0.95
1.49
1.40
0.49
0.45
49.0%
47.4%
Ch$ millions
1,151
500,270
499,119
43,363.9%
times
%
%
0.82
0.23
0.77
2.41
0.49%
0.12%
0.85
0.21
0.79
3.16
1.73%
0.42%
0.03
(0.02)
0.02
0.75
1.24%
0.30%
3.7%
(8.7%)
2.6%
31.1%
253.1%
250.0%
The current ratio at December 2004 was 1.49:1, showing
a 49.0% improvement over the year before and reflecting the
company’s improved financial situation following the capital increase
and debt refinancing operations carried out in recent two years.
The debt ratio was 0.85:1 at December 2004, a slight 3.7%
decline compared to 2003, basically because of the effect of the
Chilean exchange rate.
The return on equity reached 1.73%, compared to 0.49% at
the end of 2003. This improvement was due to the improved result
for the year.
The return on assets moved from 0.12% at December 2003 to
0.42% at December 2004, basically due to the improved result and
the reduction in total assets.
3. Principal Cash Flows
The company generated a net cash flow in 2004 of Ch$234,976 million, composed as follows:
Principal Cash Flows
Cash flow (millions of Ch$)
Operating
Financing
Investment
dec-03
588,839
(446,651)
90,584
dec-04
618,005
(189,124)
(193,905)
Net cash flow for the year
232,772
234,976
2,204
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
Change 04-03
% Change 04-03
29,166
257,527
(284,489)
5.0%
(57.7%)
(314.1%)
0.9%
255
The operating activities generated a net positive cash flow
of Ch$618,005 million which is higher than the Ch$29,166 million
generated the year before. The operating flow in 2004 comprised
the following:
•
Credits not representing cash flows of Ch$78,124 million of
which Ch$15,464 million relate to the positive conversion of
foreign subsidiaries.
•
Gain on sales of assets of ch$6,841 million.
Net income for the year was Ch$44,308 million, plus:
Charges to income not representing cash flows of Ch$589,794
million, corresponding mainly to depreciation for the year of
Ch$379,491 million, write-offs and provisions of Ch$38,380
million, amortization of goodwill of Ch$53,201 million and
other charges not representing flows of Ch$111,142 million
which included the effect of the negative conversion of foreign
subsidiaries of Ch$30,810 million.
Change in net liabilities of Ch$107,571 million, affecting cash
flows.
The above was partially compensated by:
The increase in net assets affecting operating cash flows of
Ch$38,701 million.
•
•
•
Financing activities produced a net negative cash flow of
Ch$189,124 million, mainly due to loan repayments of Ch$1,191,305
million, dividend payments of Ch$97,013 million, bond repayments
of Ch$22,110 million and distribution of capital of subsidiaries of
Ch$21,172 million. This was partially offset by loans drawn of
Ch$827,706 million, bonds placed of Ch$328,720 million and other
sources of finance of Ch$22,781 million.
Investment activities generated a net negative cash flow of
Ch$193,905 million, mainly reflecting the acquisition of fixed assets
of Ch$265,934 million, particularly Endesa’s investment in its Ralco
plant, of Ch$65,258 million in 2004, and other disbursements of
Ch$1,592 million, partially offset by other investment income of
Ch$40,574 million, the collection of loans to related companies of
Ch$15,295 million and the sale of permanent investments of Ch$2,557
million.
Company
Endesa S. A.
Chilectra S. A.
Río Maipo S. A.
Edesur S. A.
Edelnor S. A.
Cerj
Coelce
Codensa S. A.
Cam Ltda.
Inmobiliaria Manso de Velasco Ltda.
Synapsis Soluciones y Servicios Ltda.
Holding Enersis
Acquisitions of Fixed Assets
Depreciation
dec-03
134,419
25,601
dec-04
96,136
32,716
dec-03
183,976
13,077
dec-04
170,790
14,696
-
-
-
-
25,652
19,311
23,661
19,636
16,240
541
-
195
-
31,293
11,370
46,243
27,581
15,654
2,006
20
2,821
94
53,719
16,098
46,189
38,098
51,674
1,181
234
968
1,112
47,884
16,037
42,489
35,667
48,496
1,121
289
962
1,060
Consolidated total
265,256
265,934
406,325
379,491
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
256
II. BO O K VALU E AN D ECO N OM IC VALU E O F THE ASSE TS
The following should be mentioned with respect to the more
important assets:
The values of the fixed assets are adjusted according to the
accounting principles set by the Superintendency of Securities and
insurance (SVS) in its Circulars 550 and 566 of 1985. In the case of
the foreign company Inversiones Distrilima S.A., the fixed assets were
adjusted according to the exception criteria contained in Technical
Bulletin No.45 of the Chilean Institute of Accountants, which was in
force at the time the investment was made and was not modified by
Technical Bulletin No.51 that replaced it.
Depreciation is calculated on the restated value of the assets
depending on the remaining useful lives of each asset.
Investments in related companies at shown at their equity-
method value. In the case of foreign companies, the application of
this method has been made on the financial statements prepared
in accordance with the terms of Technical Bulletins Nos.72 and 64
of the Chilean Institute of Accountants and the intangible values are
restated and amortized in accordance with Technical Bulletin No.55
of the Chilean Institute of Accountants.
In accordance with SVS Circular 150 of January 31, 2003, the
company evaluated, at the close of the financial statements for
2002, the recoverability of assets related to its investments, applying
accounting principles generally accepted in Chile (Technical Bulletin
No.33 for fixed assets and NIC 36 for the hierarchy defined in Technical
Bulletin No.56 for the increased or decreased values related to such
investments).
Assets expressed in foreign currencies are shown at the
exchange rate current on the closing date.
Investments in financial instruments under resale agreements
are shown at their cost plus the proportion of the corresponding
interest according to the rate implied in each transaction.
Accounts and notes receivable from related companies are
classified according to their short or long-term maturities. The
operations meet conditions of equity similar to those normally
prevailing in the market.
In summary, the assets are shown in accordance with generally
accepted accounting principles and standards, and the respective
instructions issued by the SVS, as mentioned in Note 2 to the financial
statements.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
257
U N C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
25 8
25 9
26 0
26 2
26 3
26 5
26 6
29 0
29 1
R EP O RT FRO M T H E I N S PEC TO RS O F ACCO U N T
R EP O RT O F I N D EPEN D EN T ACCO U N TA N TS
U N CO N S O L I DAT ED BA L A N CE S H EE TS
U N CO N S O L I DAT ED I N CO M E STAT E M EN T
STAT E M EN TS O F U N CO N S O L I DAT ED C A S H FLOWS
STAT E M EN TS O F CH A N G ES I N S H A R EH O L D ERS’ EQ U I T Y
N OT ES TO T H E U N CO N S O L I DAT ED FI N A N CI A L S TAT E M EN TS
U N CO N S O L I DAT ED M AT ER I A L I N F O R M AT I O N
M A N AG E M EN T’S A N A LYS I S O F T H E U N CO N S O L I DAT ED FI N A N CI A L STAT E M EN TS
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
258
R E P O R T F R O M T H E I N S P E C T O R S O F A C C O U N T
In accordance with the stipulations of Law Nº 18,046 on Limited Liability Stock Companies and in
compliance with the mandate conferred by the Ordinary General Meeting of Shareholders held on
March 26, 2004, we have proceeded to examine the Financial Statements of Enersis S.A. for the period
between January 1 and December 31 of the year 2004.
Our task was centered on the verification, on a selective basis, of the match between the amounts
included in the financial statements and the official registers of the Company and for this purpose
we compared the figures presented in the general ledger against the grouping and classification
spreadsheets, in order to subsequently verify that these amounts, which represent the totals of the
accounts under one item, coincided with those included in the financial statements, We have no
observations on this review.
José Santiago Edwards
José Santiago Edwards
José Santiago Edwards
Inspector of Accounts
Luis Bone
Luis Bone
Luis Bone
Inspector of Accounts
Santiago, January 28, 2005
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
R E P O R T O F I N D E P E N D E N T A C C O U N T A N T S
259
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
260
U N C O N S O L I D A T E D B A L A N C E S H E E T S
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s a s o f
D e c e m b e r 31, 2 0 0 4 a n d t h o u s a n d s o f U S d o l l a r s )
ASSETS
CURRENT ASSETS:
Cash
Time deposits
Notes receivable, net
Other accounts receivable, net
Amounts due from related companies
Income taxes recoverable
Prepaid expenses
Deferred income taxes
Other current assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT:
Buildings and infraestructure
Machinery and equipment
Other assets
Technical appraisal
Sub - total
Less: accumulated depreciation
As of December 31,
2003
ThCh$
2004
ThCh$
341,241
1,181,114
755
82,267
9,176,155
737
1,774,192
2,227,626
128,562,558
26,874,285
14,843,891
55,432
28,516,072
17,303,424
-
-
42,802,273
18,136,958
192,578,679
99,300,301
21,318,189
2,359,443
818,188
34,005
21,318,134
2,196,587
1,158,196
33,988
24,529,825
24,706,905
(11,919,198)
(12,530,600)
Total property, plant and equipment, net
12,610,627
12,176,305
OTHER ASSETS:
Investments in related companies
Investment in other companies
Goodwill, net
Negative goodwill, net
Long-term receivables
Amounts due from related companies
Intangibles
Accumulated amortization
Other assets
Total other assets
TOTAL ASSETS
2,226,881,670
2,250,223,210
-
15,508,173
753,106,535
706,355,890
(621,934)
487,265
(635,425)
-
451,554,968
434,047,535
1,473,876
(434,208)
27,395,174
1,473,876
(508,041)
12,327,667
3,459,843,346
3,418,792,885
3,665,032,652
3,530,269,491
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
261
As of December 31,
2003
ThCh$
2004
ThCh$
809,498
4,173,363
114,402
177,329
247,085
34,809,445
22,183,350
136,704
16,691,677
139,111
8,680,005
31,837
9,062,455
53,507
187,258
94,604
76,122,916
18,012,095
193,498
-
31,379
544,059
88,161,969
104,333,608
304,322,500
195,090,000
643,421,975
592,028,750
2,565,412
4,818,080
9,641,028
2,565,071
3,520,749
73,178,171
964,768,995
866,382,741
2,283,404,124
2,283,404,124
163,306,446
162,725,821
(26,313,477)
(122,588,994)
180,417,144
194,378,259
12,779,560
(1,492,109)
44,307,596
(2,673,664)
LIABILITIES AND SHAREHOLDERS´ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt due to banks and financial institutions
Current portion of bonds payable
Dividends payable
Accounts payable
Miscellaneous payables
Amounts payable to related companies
Accrued expenses
Withholdings
Income taxes payable
Unearned income
Other current liabilities
Total current liabilities
LONG -TERM LIABILITIES:
Due to baks and financial institutions
Bonds payable
Accrued expenses
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
SHAREHOLDERS´ EQUITY:
Paid-in capital, no par value shares
Additional paid-in capital
Other reserves
Retained earnings
Net income for the year
Deficit of subsidiaries in development stage
Total shareholders´ equity
2,612,101,688
2,559,553,142
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY
3,665,032,652
3,530,269,491
The accompanying notes are an integral part of these financial statements
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
262
U N C O N S O L I D A T E D I N C O M E S T A T E M E N T
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s a s o f
D e c e m b e r 31, 2 0 0 4 a n d t h o u s a n d s o f U S d o l l a r s )
OPERATING INCOME:
SALES
COST OF SALES
GROSS PROFIT
ADMINISTRATIVE AND SELLING EXPENSES
OPERATING LOSS
NON-OPERATING INCOME SELLING EXPENSES:
Interest income
Equity in income of related companies
Other non-operating income
Equity in losses of related companies
Amortization of goodwill
Interest expense
Other non-operating expenses
Price-level restatements, net
Exchange difference, net
NON-OPERATING RESULT
Years ended December 31,
2003
ThCh$
2004
ThCh$
4,440,316
(1,158,548)
4,432,912
(1,101,472)
3,281,768
3,331,440
(17,443,744)
(17,314,877)
(14,161,976)
(13,983,437)
40,618,484
30,514,861
116,577,629
157,530,500
102,226,101
(73,440,467)
(51,110,145)
(146,131,051)
(23,686,725)
(4,536,852)
31,296,475
9,995,020
(20,852,813)
(51,264,529)
(71,623,008)
(15,960,008)
(2,131,915)
5,096,826
(8,186,551)
41,304,934
INCOME (LOSS) BEFORE INCOME TAXES AND AMORTIZATION OF NEGATIVE GOODWILL
(22,348,527)
27,321,497
INCOME TAX
12,951,801
16,945,821
INCOME (LOSS) BEFORE AMORTIZATION OF NEGATIVE GOODWILL
(9,396,726)
44,267,318
AMORTIZATION OF NEGATIVE GOODWILL
NET INCOME FOR THE YEAR
The accompanying notes are an integral part of theese financial statements
22,176,286
40,278
12,779,560
44,307,596
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
S T A T E M E N T S O F U N C O N S O L I D A T E D C A S H F L O W S
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s a s o f
D e c e m b e r 31, 2 0 0 4 a n d t h o u s a n d s o f U S d o l l a r s )
263
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) for the year
GAIN (LOSSES) FROM SALES OF ASSETS:
Gain on sales of investments
Changes (credits) to income wihch do not represent cash flows:
Depretiation
Amortization of intangibles
Equity in income of related companies
Equity in losses of related companies
Amortization of goodwill
Amortization of negative goodwill
Price-level restatement, net
Exchange difference, net
Other credits to income which do not represent cash flows
Other charges to income which do not represent cash flows
Changes in assets which affect cash flows:
Decrease in dividends receipts
Decrease (increase) in trade receivables
Decrease in other assets
Changes in liabilities which affect cash flows:
Increase (decrease) in accounts payable associated with operating results
Increase in interest payable
Decrease in income tax payable
Increase in other accounts payable associated with non-operating results
Net decrease in value added tax and other similar taxes payable
Years ended December 31,
2003
2004
ThCh$
ThCh$
12,779,560
44,307,596
(90,022,773)
-
1,112,068
73,833
(116,577,629)
73,440,467
51,110,145
(22,176,286)
4,536,852
(31,296,475)
(299,592)
54,513,673
1,054,993
73,833
(157,530,500)
20,852,813
51,264,529
(40,278)
2,131,915
(5,096,826)
(865,132)
28,994,053
-
(454,853)
18,226,354
66,476,784
436,741
(8,937,104)
(5,914,032)
(28,093,955)
(12,951,801)
1,545,313
4,832
(4,216,879)
5,813,329
(18,124,485)
(19,309,679)
38,021
Net cash flows used in operating activities
(90,444,299)
7,323,724
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
264
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of shares
Loans obtained
Proceeds from bond issuances
Loans obtained from related companies
Other sources of financing
Dividends paid
Payment of loans
Payment of bonds
Payment of loans granted by related companies
Payment of other loans obtained from related companies
Payment of bond issuance costs
Other disbursements for financing
Years ended December 31,
2003
2004
ThCh$
ThCh$
560,126,472
376,687,632
224,868,923
-
18,153,248
(72,526)
(1,081,078,487)
(87,566,290)
(4,579,223)
(61,941,413)
(11,102,445)
(61,812,117)
-
75,263,089
-
84,767,891
12,644,430
(59,093)
(166,967,236)
(134,639)
(85,248,568)
(11,441,165)
-
(2,712,427)
Net cash used in financing activities
(128,316,226)
(93,887,718)
CHASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of long-term investments
Proceeds from loans granted to related companies
Proceeds from other loans granted to related companies
Long-term investments
Additions to property, plant and equipment
Loans granted to related companies
Other receipts from investments
165,464,042
54,398,161
-
-
-
(5,932,860)
1,676,345
-
108,694,177
98,221,201
(343,959)
(94,031)
(99,393,687)
2,122,134
Net cash provided by investing activities
215,605,688
109,205,835
NET CASH FLOW FOR THE YEAR
(3,154,837)
22,641,841
EFFECT OF PRICE-LEVEL RESTATEMENT ON CASH AND CASH EQUIVALENTS
(518,808)
(313,563)
NET INCREASE IN CASH AND CASH EQUIVALENTS
(3,673,645)
22,328,278
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
5,195,998
1,522,353
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
1,522,353
23,850,631
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
S T A T E M E N T S O F C H A N G E S I N S H A R E H O L D E R S ’ E Q U I T Y
( E x p r e s s e d i n t h o u s a n d s o f h i s t o r i c a l C h i l e a n p e s o s , e x c e p t a s s t a t e d )
265
As of January 1, 2003
Capital increase
Transfer of prior year loss to retained earnings
Changes in equity of affiliates
Deficit of subsidiaries in the development stage
Cumulative translation adjustment
Price-level restatement of capital
Net income for the year
Paid-in
capital
ThCh$
751,208,197
1,471,844,920
-
-
-
-
4,658,223
-
Additional
paid-in
capital
ThCh$
33,370,057
125,881,577
-
-
-
-
71,728
-
Retained
earnings
ThCh$
Other
reserves
ThCh$
46,879,587 402,807,650
-
-
- (228,581,520)
-
-
-
1,790,596
-
(11,432,599)
-
(61,587,469)
468,796
-
Deficit of
subsidiaries in
development stage
ThCh$
(4,937,110)
-
4,833,433
-
(1,302,667)
-
(49,372)
-
Net income
(loss) for
the year
ThCh$
Total
ThCh$
(223,748,087) 1,005,580,294
- 1,597,726,497
-
(11,432,599)
(1,302,667)
(61,587,469)
6,939,971
12,467,863
223,748,087
-
-
-
-
12,467,863
As of December 31, 2003
2,227,711,340
159,323,362
(25,671,685) 176,016,726
(1,455,716)
12,467,863 2,548,391,890
As of December 31, 2003 (1)
2,283,404,124
163,306,446
(26,313,477) 180,417,144
(1,492,109)
12,779,560 2,612,101,688
As of January 1, 2003
Capital increase
Transfer of prior year income to retained earnings
Changes in equity of affiliates
Cumulative translation adjustment
Reserve Technical Bulletin No. 72
Price-level restatement of capital
Net income for the year
2,227,711,340
-
-
-
159,323,362
(563,714)
-
-
-
55,692,784
-
3,966,173
-
(25,671,685) 176,016,726
-
13,629,822
-
-
-
4,731,711
-
-
-
(4,435,524)
(103,832,123)
11,992,130
(641,792)
-
(1,455,716)
-
(1,161,959)
-
-
-
(55,989)
-
12,467,863 2,548,391,890
(563,714)
-
(4,435,524)
(103,832,123)
11,992,130
63,692,887
44,307,596
-
(12,467,863)
-
-
-
-
44,307,596
As of December 31, 2004
2,283,404,124
162,725,821
(122,588,994) 194,378,259
(2,673,664)
44,307,596 2,559,553,142
(1) Restated in thousands of constant Chilean pesos as of December 31, 2004.
The accompanying notes are an integral part of these consolidated financial statements
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
266
N O T E S T O T H E U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
( R e s t a t e d f o r g e n e r a l p r i c e - l e v e l c h a n g e s a n d e x p r e s s e d i n t h o u s a n d s o f c o n s t a n t C h i l e a n p e s o s a s o f
D e c e m b e r 31, 2 0 0 4 , e x c e p t a s s t a t e d )
N OTE 1. D ESCRIP TI O N O F BUSI N ESS
d) Price-level restatement
Ener sis S. A . (the “Company ” ) is regis tered in the
Securities Register under N°0175 and is regulated by the Chilean
Superintendence of Securities and Insurance (the “SVS”). The
Company issued American Depositary Receipts in 1993 and 1996
and is also subject to the regulation of the Securities and Exchange
Commission (SEC) of the United States.
The financial statements have been price-level restated in
accordance with generally accepted accounting principles, to reflect
the effects of the changes in the purchasing power of the Chilean
peso for the years ended December 31, 2004 and 2003. The effects
of these off-the-books restatements are shown in Note 20.
e) Currency conversion
N OTE 2. SUM M ARY O F SI G N IFIC ANT
ACCO U NTI N G P O LICIES
a) Periods covered
Assets and liabilities denominated in foreign currencies and/or
Unidad de Fomento (UF, Inflation index linked units of accounts) are
shown at their corresponding values and/or exchange rates effective
at each year end using the following year-end rates:
These financial statements cover the years ended December
31, 2003 and 2004.
b) Basis of preparation
The financial statements have been prepared in accordance
with generally accepted accounting principles in Chile and the
regulations established by the SVS (collectively “Chilean GAAP”),
except for the investment in subsidiaries, which is shown in one line
of the balance sheet under the equity method and, therefore, have
not been consolidated line by line. This treatment does not affect
the net income of the year or shareholders’ equity.
These financial statements have been prepared order an
individual analysis of the Company and they should be read along
with the consolidated financial statements required by accounting
principles accepted in Chile.
These financial statements include assets, liabilities and
result of the agency established in 1996 by Enersis S.A. in Cayman
Islands.
c) Basis of presentation
The 2003 financial statements and its corresponding notes are
presented updated and restated by 2.5% to facilitate comparison.
This percentage corresponds to the Consumer Price Index variation
within the last twelve months, with a one-month lag.
Currency
United States dollar (Observed)
Euro
Unidad de Fomento (UF)
Symbol
used
US$
UF
2003
Ch$
593.80
744.95
16,920.00
2004
Ch$
557.40
760.13
17,317.05
Convenience translation to U.S. dollars
The financial statements are stated in Chilean pesos. The
translations of Chilean pesos into US dollars are included solely for
the convenience of the reader, using the observed exchange rate
reported by the Chilean Central Bank as of December 31, 2004 of
Ch$557.40 to US$1.00. The convenience translations should not be
construed as representations that the Chilean peso amounts have
been, could have been, or could in the future be, converted into US
dollars at this or any other rate of exchange.
f)
Time deposits
Time deposits are presented at original placement plus accrued
interest and indexation adjustments at each year end.
g) Property, plant and equipment
Property, plant and equipment are stated at cost plus price-
level restatement.
In 1986, the increase resulting from a technical appraisal
of property, plant and equipment was recorded in the manner
authorized by the SVS in Circulars No.’s 550 and 566 dated October
15 and December 16, 1985, respectively, and Communication N°4790,
dated December 11, 1985.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
267
At December 31, 2003 and 2004, the Company has evaluated
the recoverability of the book value of its property, plant and
equipment in accordance with Technical Bulletin N°33 of the Chilean
Accounting Association. As a result of this evaluation no adjustments
have been determined that affect the book values of these assets.
the Chilean Association of Accountants, it has resorted to IAS 36
“Impairment of Assets Value”. As a result of this evaluation, no
adjustments have been determined that affect the book values of
these assets.
h) Depreciation
Depreciation expense is calculated on the revalued balances
using the straight-line method over the estimated useful lives
of the assets. Depreciation expense was ThCh$1,112,068 and
ThCh$1,054,993 in 2003 and 2004, respectively.
i)
Intangibles
Intangibles are mainly easements, and amor tized in
accordance with Technical Bulletin N°55 of the Chilean Association
of Accountants.
j)
Investments in related companies
Investments in related companies are presented under the
equity method of accounting, on the basis of the corresponding
financial statements of the invested.
Investments in foreign affiliates are recorded in accordance
with Technical Bulletins No. 64 and 72 (which partially revoked
Techinal Bulletin No. 42) of the Chilean Association of Accountants.
The Company has evaluated at December 31, 2003 and 2004,
the recoverability of the book value of its investments abroad in
accordance with Technical Bulletin N°33 of the Chilean Accounting
Association. As a result of this evaluation no adjustments have been
determined that affect the book values of these assets.
k) Investments in other corporations
Investments in other corporations are valued at monetary
adjusted adquisition cost.
l) Goodwill and negative goodwill
Goodwill and negative goodwill are determined according to
Circular N° 1697 (which revoked Technical Bulletin No. 42) of the SVS.
Amortization is calculated using the straight-line method, considering
the nature and characteristic of each investment, foreseeable life of
the business and investment return, and does not exceed 20 years.
The Company has evaluated at December 31, 2003 and 2004,
the recoverability of its goodwill and negative goodwill arising on
investments abroad, and in virtue of Technical Bulletin N°56 of
m) Bonds
Bonds payable are recorded at the face value of the bonds.
The difference between the face value and the placement value,
equal to the premium or discount, is deferred and amortized over
the term of the bonds.
n)
Income tax and deferred income taxes
At December 31, 2003 and 2004, the Company recorded
current tax expense according to the tax laws. The Company records
income taxes in accordance with Technical Bulletin N°60 and its
complements of the Chilean Association of Accountants, and with
circular N°1466 and N°1560 issued by the SVS, recognizing the
deferred tax effects of temporary differences between the financial
and tax values of assets and liabilities using the tax rates estimated
to be in effect at the time of reversal of the temporary differences
that gave rise to them.
o) Severance indemnity
The severance indemnity that the Company is obliged to pay to
its employees under collective bargaining agreements is stated at the
present value of the benefit under the vested cost method, discounted
at 6.5% (9.5% in 2003) and assuming an average employment span
which varies based upon years of service with the Company.
p) Revenue recognition
The Company recognizes revenues for amounts received from
substations rental and electrical distribution lines in accordance with
contracts with Chilectra S.A. These amounts are presented in current
assets as amounts due from related companies and the corresponding
cost is included in cost of sales as depreciation of the aforementioned
equipment and electrical installations.
q) Pension and post-retirement benefits
Pension and post-retirement benefits are recorded in
accordance with the respective Collective Bargaining Contracts of
the employees based on the actuarially determined projected benefit
obligation, discounted at 6.5% (9.5% in 2003).
r) Accrued vacation expense
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
268
In accordance with Technical Bulletin No.47 issued by the
Chilean Association of Accountants, employee vacation expense is
recorded on the accrual basis.
For classification purposes, cash flows from operations include
collections and payments to related companies for services and
dividends paid.
s) Financial derivative contracts
w) Cost of share issue
As of December 31, 2003 and 2004 the Company has forward
contracts, currency swaps, and interest swaps and collars with
several financial institutions, defined as cover, which are recorded
according to Technical Bulletin N°57 of the Chilean Association of
Accountants.
Costs incurred to date associated with issuing and placing
shares are recorded according to the provisions of Circular No. 1370
of 1998 of the Superintendence of Securities and Insurance. The
amounts under these items are deducted from the premium account.
Breakdown of the costs is shown in Note 23.
t) Software
x) Reclassification
Software has acquired by the Company and its subsidiaries as
Do not reclassification was made at December 31, 2003.
computing packages and is amortized over a 3-year term.
u) Research and development costs
During 2003 and 2004 there have been no expenses under
this caption which require footnote disclosure as required by Circular
No. 981 of SVS dated December 28, 1990.
v) Statements of cash flows
Investments considered as cash equivalents, as indicated in
point 6.2 of Technical Bulletin N°50 issued by the Chilean Association
of Accountants, include cash and time deposits.
N OTE 3. CHAN GE I N ACCO U NTI N G
PRI NCIPLES
As from January 1, 2004, the Superintendence of Securities
and Insurance, through Circular Letter 1697, has made demandable
the adoption of Technical Bulletin 72 on Business Combinations,
issued by the Accountants Association of Chile. These regulations
have been applied by the Company regarding permanent investment
and interest unification.
Regarding indemnity for years of service, the Company
modified the deduction rate from 9.5% in 2003 to 6.5% in 2004
and its workers future permanence, which are the parameters
used to assess the said liabilities. These changes resulted in the
acknowledgement of a larger net charge of ThCh$204,389 to income
during the current fiscal year.
In addition, in the provision for after-retirement benefits, the
deduction rate was also modified from 9.5% in 2003 to 6.5% in 2004,
which resulted in a higher charge of ThCh$107,881 to the margin.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
269
N OTE 4. TR ANSAC TI O NS WITH REL ATED COMPAN IES
Balances of accounts receivable and payable are as follows at December 31, 2003 and 2004:
a) Notes and accounts receivable:
Company
Chilectra S.A.
Synapsis, Soluciones y Servicios IT Ltda.
Inmobiliaria Manso de Velasco Ltda.
Cía. Americana de Multiservicios Ltda.
Enersis Internacional
Chilectra S.A. ( Agencia en Islas Cayman )
Construcciones y Proyecto Los Maitenes S.A.
Edelnor S.A.
Companhia de Eletricidade do Río de Janeiro
Luz de Bogotá S.A.
Edesur S.A.
Luz de Rio Ltda.
Codensa S.A.
Empresa Eléctrica de Colina Ltda.
Endesa S.A. (Chile)
Elesur S.A.
Inversiones Distrilima S.A.
Ingendesa S.A.
Chilectra Internacional
Túnel el Melón S.A.
Smartcom S.A.
Compañía Eléctrica Tarapacá S.A. (Celta)
Endesa S.A. (España)
Chispa Uno S.A.
Empresa Eléctrica Pehuenche S.A.
Aguas Santiago Poniente S.A.
As of December 31 ,
Short-term
Long-term
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
70,777,485
12,143,747
95,557,104
88,017,114
53,297
35,043
398,422
6,496,794
9,527
-
58,546
18,248
21,127
54,251
14,584
12,449
312
7,840
56,662
339,736
6,321,005
10,813
1,006
53,617
16,711
-
49,684
13,356
11,401
-
49,921,481
1,390,304
21,969
500
1,668
21,094
487
1,029
-
5,751,963
83,042
350
29,442
522,285
286
700
80,393
936
28,704
543,797
-
-
30,750
30,000
-
-
-
-
-
-
1,936,321
-
319,399,909
308,861,143
-
-
-
-
-
-
-
-
-
-
36,597,955
35,232,957
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
128,562,558
26,874,285
451,554,968
434,047,535
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
270
b) Notes and accounts payable:
Company
Chilectra S.A.
Synapsis, Soluciones y Servicios IT Ltda.
Inmobiliaria Manso de Velasco Ltda.
Cía. Americana de Multiservicios Ltda.
Enersis Internacional
Endesa S.A. (Chile)
Edelnor S.A.
Edesur S.A.
Elesur S.A.
Smartcom S.A.
Túnel el Melón S.A.
Endesa Internacional S.A.
Ingendesa S.A.
Chilectra Internacional
Chilectra S.A. ( Agencia en Islas Cayman )
Endesa Inversiones Generales S.A.
As of December 31 ,
Short-term
Long-term
2003
ThCh$
690,211
5,279,471
18,564,647
8,667,028
1,360,622
76,026
14,284
13,596
-
19,882
63
2004
ThCh$
1,457,449
1,828,343
8,938,838
7,273,980
1,251,201
79,969
13,082
12,451
8,140
-
-
-
55,209,694
385
42
31,129
92,059
-
38
28,508
21,223
2003
ThCh$
2004
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Income (expense)
2003
ThCh$
10,417,852
4,440,316
4,792,078
(591,720)
(388,735)
(179,948)
197,670
(13,038)
(351,421)
(384,097)
(611,578)
3,247,883
(9,499,614)
1,783,139
740,075
(952,435)
23,595,922
1,844,337
513,972
-
380,507
-
2004
ThCh$
4,460,581
4,432,912
4,735,989
(646,667)
(368,316)
(443,669)
215,229
(18,324)
(494,128)
(194,368)
(474,047)
1,968,506
-
2,062,053
739,618
(990,824)
21,136,955
1,716,375
400,218
(25,830)
(64,184)
56,936
38,981,165
38,205,015
Total
34,809,445
76,122,916
c) Effects in income (expense) in each year are as follows:
Company
Chilectra S.A.
Inmobiliaria Manso de Velasco Ltda.
Compañía Americana de Multiservicios Ltda.
Synapsis, Soluciones y Servicios IT Ltda.
Empresa Distribuidora Sur S.A.
Elesur S.A.
Endesa S.A. (Chile)
Endesa Inversiones Generales S.A.
By agency intermediation:
Chilectra S.A.(Cayman Islands Agency)
Luz de Río
Enersis Internacional
Endesa Chile Internacional
Endesa Agencia
Chilectra Internacional
Total
Nature of
Transaction
Loans
Property rental
Services
Loans
Property rental
Loans
Services
Materials
Property maintenance
Loans
Services
Services
Loans
Loans
Services
Property rental
Loans
Loans
Loans
Loans
Loans
Loans
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
271
The transfer of short-term funds between related companies is on the basis of a current cash account, at a variable interest rate based
on market conditions. The resulting accounts receivable and accounts payable are essentially on 30 day terms, with automatic rollover for
the same period and settlement in line with cash flows.
d) Conditions of the long-term receivables and payables are as follows:
Company
Chilectra S.A.
Chilectra S.A.
Compañía Americana Multiservicios Ltda.
Type
Account receivable
Account receivable
Account receivable
Due Date
2007
2007
2007
Currency
UF
UF
UF
Capital
3,789,246.41
1,293,438.79
111,837.45
Interest Rate
3.40%
3.33%
3.33%
Chilectra S.A.( Agencia en Islas Cayman )
Account receivable
Luz de Rio Ltda.
Account receivable
2007
2007
US$
US$
554,110,411.63
7.01%
46,919,950.58
6.98%
N OTE 5. D EFERRED I NCOME TA XES
a)
Income taxes payable as of each year-end are as
b)
The Company has tax losses of ThCh$206,607,440
follows:
Credits for absorbed profits
PPM, donations, training expense
As of December 31,
2004
ThCh$
2003
ThCh$
14,695,371
148,520
Total income taxes recoverable
14,843,891
Tax for sale of investments
Income tax prior year
16,691,677
-
Total income tax payable
16,691,677
and ThCh$288,397,778 for the years ended
December 31, 2003 and 2004, respectively.
-
-
-
-
-
-
c) The balance of taxed retained earnings and related
tax credits are as follows:
Year
2004
As of December 31, 2004
Loss
ThCh$
239,949,691
Credit
ThCh$
-
d)
In accordance with BTs N°60 and 69 of the Chilean Association of Accountants, and Circular N°1,466 of the
SVS, the Company has recorded deferred income taxes as of December 31, 2003 and 2004 as follows:
As of December 31, 2003
As of December 31, 2004
Asset
Short-term Long-term
Liability
Asset
Short-term Long-term Short-term Long-term Short-term Long-term
Liability
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
ThCh$
Unearned income
Vacation accrual
Depretiation
Severance indemnities
Other events
Provisions
Bond discount
Deferred charges
Tax losses
Complementary account, net
23,649
73,349
-
-
87,200
385,644
-
-
29,261,998
-
-
-
-
-
96,367
-
-
-
-
-
-
-
60,268
-
-
5,864
-
-
1,779,119
41,711
-
1,249
112,726 1,208,080
1,138,429 2,040,858
-
(1,519)
(156,570)
5,334
108,096
-
-
101,455
456,851
-
-
- 42,778,937
-
-
-
-
-
130,446
-
-
-
-
-
-
-
-
-
135
-
-
60,580 1,704,538
133,412
-
676
135,394 1,218,030
734,799
452,291
-
-
(140,260)
-
Total
29,831,840
96,367 1,315,768 4,914,447 43,450,673 130,446
648,400 3,651,195
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
272
e)
Income tax expense for the years ended December
31, 2003 and 2004 is as follows:
As of December 31,
2003
ThCh$
2004
ThCh$
Income tax provision
Adjustment for tax expense - prior year
(16,691,678)
-
-
784,289
Effect on deferred tax assets or liabilities for the year
397,570
1,944,862
Benefits for tax losses
Amortization of complementary accounts
29,261,998
14,230,645
(16,089)
(13,975)
Total
12,951,801 16,945,821
N OTE 6. OTHER CU RRENT ASSE TS
Other current assets as of each year-end are as follows:
Forward contracts
Deferred costs-loans (1)
Post-retirement benefits
Deferred expense Collar contracts
Bond discount
Fair value - derivative contracts
Unrealized loss derivative contracts
Reverse repurchase agreements (2)
Other
As of December 31,
2003
2004
ThCh$
ThCh$
8,631,079
2,016,936
35,541
4,762,902
683,192
152,882
829,775
-
1,416,151
796
1,200,976
926,826
-
-
- 14,592,209
-
191,117
Total
17,303,424 18,136,958
(1) See Note 10.
(2) The detail of reverse repurchase agreements is a follows:
Code Date start Date end
Financial Institution
Currency Document
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
CRV
UF
29/12/04 03/01/05 BBVA C. BOLSA BHIF S.A.
UF
29/12/04 03/01/05 BBVA C. BOLSA BHIF S.A.
UF
29/12/04 03/01/05 BBVA C. BOLSA BHIF S.A.
UF
29/12/04 03/01/05 BBVA C. BOLSA BHIF S.A.
UF
29/12/04 03/01/05 BBVA C. BOLSA BHIF S.A.
UF
29/12/04 03/01/05 BBVA C. BOLSA BHIF S.A.
UF
29/12/04 03/01/05 BBVA C. BOLSA BHIF S.A.
29/12/04 03/01/05 BBVA C. BOLSA BHIF S.A.
UF
29/12/04 03/01/05 VALORES SECURITY S.A. C.B. UF
D.P.R.
D.P.F.
CERO
D.P.F.
D.P.F.
D.P.F.
D.P.F.
D.P.F.
BONO
Interest rate
%
0.33%
0.33%
0.33%
0.33%
0.33%
0.33%
0.33%
0.33%
0.37%
Current amount
ThCh$
1,718,058
202,820
55,201
1,744,948
801,652
2,634,291
5,030,869
1,725,148
683,696
Nominal
ThCh$
1,717,190
202,710
55,189
1,743,989
801,289
2,633,052
5,027,775
1,724,822
683,315
Fair value
ThCh$
1,717,533
202,755
55,192
1,744,373
801,429
2,633,534
5,029,012
1,724,914
683,467
Total
14,596,683
14,589,331
14,592,209
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 7. PRO PERT Y, PL ANT AN D EQ U IPMENT
The composition of property, plant and equipment as of each year-end is as follows:
Buildings and infraestructure
Machinery and equipment
Other assets transit
Technical appraisal of buildings and infraestructure
Total fixed assets
Accumulated depreciation at beginnig of year
Buildings and infraestructure
Machinery and equipment
Other assets in transit
273
As of December 31,
2003
ThCh$
21,318,189
2,359,443
818,188
34,005
2004
ThCh$
21,318,134
2,196,587
1,158,196
33,988
24,529,825
24,706,905
(9,663,675)
(879,780)
(240,303)
(9,961,922)
(1,042,108)
(446,994)
Total accumulated depretiation at beginning of year
(10,783,758)
(11,451,024)
Accumulated depreciation at beginning of year-technical appraisal of buildings and infraestructure
(23,372)
(24,583)
Depreciation of the year
Depreciación del ejercicio (gasto administración y ventas)
(1,084,715)
(27,353)
(1,027,639)
(27,354)
Total depreciacion acumulada con cargo a Resultado
(1,112,068)
(1,054,993)
Total accumulated depreciation at end of year
(11,919,198)
(12,530,600)
Total property, plant and equipment, net
12,610,627
12,176,305
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
274
N OTE 8. I NVESTMENT I N REL ATED COMPAN IES
a)
Investments as of each year-end are as follows:
Related Companies
Empresa Nacional de Electricidad S.A.
Chilectra S.A.
Enersis Internacional
Luz de Bogotá S.A. (2)
Empresa Distribuidora Sur S.A.
Investluz S.A.
Distrilec Inversora S.A.
Inmobiliaria Manso de Velasco Ltda.
Inversiones Distrilima S.A.
Elesur S.A.
Number of
shares
4,919,488,794
59.98%
359,602,435
98.24%
15,529,421,297,372
25.71%
143,996,758
16.02%
15,681,945,734
15.61%
101,684,374
20.43%
29,462,253
100.00%
95,363,337
15.93%
Companhia de Eletricidade do Río de Janeiro
766,367,324,642
26.47%
Central Geradora Termelétrica Fortaleza S.A. (*)
20,246,908
48.82%
Compañía Americana de Multiservicios Ltda.
Synapsis, Soluciones y Servicios IT Ltda.
33,821,693
10,569,721
Endesa Market Place (3)
Synapsis Colombia S.A.
Luz de Río Ltda.
Constructora El Gobernador Ltda. (1)
Codensa S.A.
Total
-
1
-
-
16,466,029
99.99%
99.99%
0.00%
0.10%
-
-
-
(1) Company merged with Inmobiliaria Manso de Velasco Ltda.
(2) Company dissolved during 2004.
(3) Company with negative equity.
b)
According to the provisions of Technical Bulletin 64 of the
Chilean Institute of Accountants, in 2003 the Company matched
the exchange difference produced in liabilities contracted in the
same investment control currency, thereby being specifically
designated and booked as hedge instruments. During the
second quarter of this year, the Company has contracted
instruments (Swap) re-denominating such debt in inflation
index-linked units of account. Hence, the debt and the
investment are no longer matched.
c) Capital increase in Cerj
On December 11, 2003, the Compañía de Electricidade do Rio
de Janeiro S.A. shareholders extraordinary assembly was held, which
approved a capital stock increase of an approximate value of MUS$
250,000.
The capital stock increase for the Compañía de Electricidade do
Rio de Janeiro S.A. was concretized on February 27, 2004, for MR$
710,000 (around MUS$ 243,000), at an equivalent of R$ 0.53 per
one thousand share lot (1,000 shares.)
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
360,557,685
100.00%
100.00%
303,106,179
289,428,742
(37,606,620)
(8,248,250)
(37,606,620)
(8,248,250)
303,106,177
289,428,740
Percentage
owned
2003
%
2004
%
59.98%
98.24%
Shareholders´equity
of investee
Net income of investees
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
1,529,985,763 1,568,897,981
80,084,181
83,788,756
437,157,882
457,376,117
52,756,293
77,321,577
25.71%
18.10%
16.02%
15.61%
20.43%
100.00%
15.93%
499,679,635
-
4,311,603
11,161,566
457,564,052 523,890,321
(101,242,812)
(30,959,195)
590,358,953 523,523,727
(27,778,921)
(17,129,823)
293,938,943
262,696,531
(8,899,063)
(6,494,157)
332,721,775
295,053,314
(15,646,658)
(9,654,877)
42,887,996
45,894,034
1,339,422
3,005,990
135,303,911
106,797,363
9,078,950
523,706
48.82%
99.99%
99.99%
0.00%
0.10%
-
-
(1,270,758)
24,287,590
34,295,929
55,289,063
35,969,128
42,992,062
7,027,401
5,574,542
10,476,755
12,547,446
5,793,408
4,228,085
-
-
-
-
833,461
1,933,022
686,771
1,169,734
49,207,344
-
100.00%
-
56,688,518
Equity in income
Share of equity
Unrealized income
Investment book value
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
48,035,238
50,257,276
917,699,712
941,039,623
51,827,701
75,960,597
429,463,227
449,325,589
1,108,698
2,870,117
128,489,050
-
(26,795,880)
(4,451,526)
(1,389,130)
(3,197,311)
1,339,422
1,446,277
7,026,776
5,792,829
-
-
-
687
1
-
(5,602,142)
(2,745,026)
(1,013,728)
(1,972,923)
3,005,989
83,426
(1,270,744)
11,857,202
5,574,046
4,227,662
1,170
-
-
-
121,103,230
94,799,231
94,604,042
83,893,808
45,883,412
41,006,520
67,989,928
60,292,578
42,887,981
21,553,913
45,894,018
17,012,820
-
56,687,909
16,743,273
26,992,121
833
-
-
35
5
1,933
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
917,699,712
941,039,623
429,463,227
449,325,589
303,106,177
289,428,740
128,489,050
-
121,103,230
94,799,231
94,604,042
83,893,808
45,883,412
41,006,520
67,989,928
60,292,578
42,887,981
21,553,913
45,894,018
17,012,820
-
56,687,909
16,743,273
28,583,057
8,773,795
26,992,121
32,569,036
10,869,344
833
-
-
35
5
1,933
-
-
-
100,409,940
35,965,927
42,988,236
(7,382,870)
(10,419,200)
10,475,707
12,546,191
(1,701,912)
(1,676,847)
43,137,162
136,677,687
2,235,966,452
2,262,319,257
(9,084,782)
(12,096,047)
2,226,881,670
2,250,223,210
-
-
-
22,811,381
-
-
-
386,416
-
-
12.47%
29,625,879 805,502,465
18,470,888
29,625,879
3,693,015
100,409,940
The number of shares issued was 1,339,622,641,509 equity
stock of which the subsidiary Enersis Internacional S.A., through
the inter-company debt equity conversion subscribed a total of
1,339,620,447,234 shares in two stages: 1,335,849,056,604 on
February 27, 2004, and 3,771,390,630 on March 24, 2004.
On March 30, 2004, Enersis Internacional S.A. transferred
760,255,861,477 shares to Chilectra S.A. so that the latter could
maintain its relative ownership interest as before the increase.
With this operation, Enersis S.A. and its subsidiaries direct
and indirect ownership interest percentage increases from 26.47%
to 18.10%.
According to provisions in Technical Bulletin No. 72 of the
Accountants Association of Chile A.G., for this transaction carried out
in companies of the same group, a partnership assets reserve increase
for a M$ 11,992,130 value has been acknowledged (see Note 17 g.)
N OTE 8. I NVESTMENT I N REL ATED COMPAN IES
a)
Investments as of each year-end are as follows:
Number of
shares
Percentage
owned
2003
%
Shareholders´equity
of investee
Net income of investees
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
4,919,488,794
59.98%
359,602,435
98.24%
1,529,985,763 1,568,897,981
80,084,181
83,788,756
437,157,882
457,376,117
52,756,293
77,321,577
Empresa Nacional de Electricidad S.A.
Related Companies
Chilectra S.A.
Enersis Internacional
Luz de Bogotá S.A. (2)
Empresa Distribuidora Sur S.A.
Investluz S.A.
Distrilec Inversora S.A.
Inmobiliaria Manso de Velasco Ltda.
Inversiones Distrilima S.A.
Elesur S.A.
Endesa Market Place (3)
Synapsis Colombia S.A.
Luz de Río Ltda.
Constructora El Gobernador Ltda. (1)
Codensa S.A.
Total
(1) Company merged with Inmobiliaria Manso de Velasco Ltda.
(2) Company dissolved during 2004.
(3) Company with negative equity.
Companhia de Eletricidade do Río de Janeiro
766,367,324,642
26.47%
457,564,052 523,890,321
(101,242,812)
(30,959,195)
Central Geradora Termelétrica Fortaleza S.A. (*)
20,246,908
48.82%
34,295,929
55,289,063
49,207,344
-
100.00%
-
56,688,518
(1,270,758)
24,287,590
Compañía Americana de Multiservicios Ltda.
Synapsis, Soluciones y Servicios IT Ltda.
33,821,693
10,569,721
143,996,758
16.02%
15,681,945,734
15.61%
101,684,374
20.43%
29,462,253
100.00%
95,363,337
15.93%
590,358,953 523,523,727
(27,778,921)
(17,129,823)
293,938,943
262,696,531
(8,899,063)
(6,494,157)
332,721,775
295,053,314
(15,646,658)
(9,654,877)
42,887,996
45,894,034
1,339,422
3,005,990
135,303,911
106,797,363
9,078,950
523,706
35,969,128
42,992,062
7,027,401
5,574,542
10,476,755
12,547,446
5,793,408
4,228,085
-
-
-
-
-
-
-
22,811,381
386,416
833,461
1,933,022
686,771
1,169,734
-
-
-
-
-
-
-
99.99%
99.99%
0.00%
0.10%
-
-
-
-
1
-
-
16,466,029
12.47%
29,625,879 805,502,465
18,470,888
29,625,879
2004
%
59.98%
98.24%
25.71%
18.10%
16.02%
15.61%
20.43%
100.00%
15.93%
48.82%
99.99%
99.99%
0.00%
0.10%
275
Equity in income
Share of equity
Unrealized income
Investment book value
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
2003
ThCh$
2004
ThCh$
360,557,685
100.00%
100.00%
303,106,179
289,428,742
(37,606,620)
(8,248,250)
(37,606,620)
(8,248,250)
303,106,177
289,428,740
15,529,421,297,372
25.71%
499,679,635
-
4,311,603
11,161,566
1,108,698
2,870,117
128,489,050
-
48,035,238
50,257,276
917,699,712
941,039,623
51,827,701
75,960,597
429,463,227
449,325,589
121,103,230
94,799,231
94,604,042
83,893,808
45,883,412
41,006,520
67,989,928
60,292,578
42,887,981
21,553,913
45,894,018
17,012,820
-
56,687,909
16,743,273
26,992,121
(26,795,880)
(4,451,526)
(1,389,130)
(3,197,311)
1,339,422
1,446,277
-
-
7,026,776
5,792,829
-
687
1
-
(5,602,142)
(2,745,026)
(1,013,728)
(1,972,923)
3,005,989
83,426
(1,270,744)
11,857,202
5,574,046
4,227,662
-
1,170
-
-
3,693,015
35,965,927
42,988,236
(7,382,870)
(10,419,200)
10,475,707
12,546,191
(1,701,912)
(1,676,847)
-
833
-
35
5
-
1,933
-
-
100,409,940
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
917,699,712
941,039,623
429,463,227
449,325,589
303,106,177
289,428,740
128,489,050
-
121,103,230
94,799,231
94,604,042
83,893,808
45,883,412
41,006,520
67,989,928
60,292,578
42,887,981
21,553,913
45,894,018
17,012,820
-
56,687,909
16,743,273
28,583,057
8,773,795
26,992,121
32,569,036
10,869,344
-
833
-
35
5
-
1,933
-
-
100,409,940
43,137,162
136,677,687
2,235,966,452
2,262,319,257
(9,084,782)
(12,096,047)
2,226,881,670
2,250,223,210
d) Sale of Río Maipo
e)
Purchase of Elesur S.A.
The purchasing contract between Enersis and Compañía
General de Electricidad - Distribución was signed on April 30, 2003
for the entire share participation held by Enersis (356.078.645 shares)
in the Company Río Maipo.
On May 27, 2004, Enersis S.A. purchased 49,207,343 shares
with no par value from Endesa International S.A., equivalent to
99.9989% of Elesur S.A. partnership assets. The price agreed for
the transaction was M$ 55,551,601.
The attribution to the Company CGE Distribución was made by
the Board of Directors of Enersis on March 28, 2003, with a bid of
US$170 million for the shares held by Enersis and was ratified later
at an Extraordinary Shareholders Enersis’ Meeting dated March 31,
2003.
f)
Liquidación Luz de Bogota S.A.
On July 9, 2004 the subsidiary Luz de Bogotá S.A., which had
investment in Codensa, was liquidated. As a result of the liquidation,
the Enersis agency that owned Luz de Bogotá S.A. shares have direct
investment in Codensa S.A. (12.47%).
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
276
N OTE 9. G O O DWILL AN D N EGATIVE G O O DWILL
a)
In accordance with current standards, recognition has been given to the excess of purchase price over the equity in net assets acquired
(goodwill) in the purchase of shares as of December 31, 2003 and 2004, as follows:
RUT
Company
91.081.000-6
96.524.320-8
Extranjera
Extranjera
Empresa Nacional de Electricidad S.A.
Chilectra S.A.
Inversiones Distrilima S.A.
Codensa S.A.
As of December 31,
2003
2004
Amortization
ThCh$
(44,472,559)
(6,429,582)
(1,270)
(206,734)
Net balance
ThCh$
646,704,395
103,528,346
13,976
2,859,818
Amortization
ThCh$
(44,472,559)
(6,429,580)
(1,164)
(361,226)
Net balance
ThCh$
602,231,837
97,098,765
11,635
7,013,653
Total
(51,110,145)
753,106,535
(51,264,529)
706,355,890
b)
Following current standards, recognition has been given to the excess of the equity in the net assets purchased over the purchase
price (negative goodwill) in the purchase of shares as of December 31, 2003 and 2004 as follows:
Company
Companhia de Eletricidade do Río de Janeiro (*)
Elesur S.A.
Inversiones Distrilima S.A.
Synapsis Soluciones y Servicios IT Ltda.
As of December 31,
2003
2004
Amortization
ThCh$
22,133,764
-
26,667
15,855
Net balance
ThCh$
Amortization
ThCh$
Net balance
ThCh$
-
-
(491,129)
(130,805)
-
-
24,423
15,855
-
(95,119)
(425,354)
(114,952)
Total
22,176,286
(621,934)
40,278
(635,425)
(*) According to the provisions of Circular 368 of the Superintendence of Securities and Insurance, the corporation has amortized higher quarterly installments due to the revaluation of Cerj, caused
by the capital increase in January 2003.
N OTE 10. OTHERS
Other assets as of each year-end are as follows:
Deferred commissions on foreign currency loans
Deferred expenses collar contracts
Post-retirement benefits
Bond discount
Fair value - derivative contracts
Unrealized loss derivative contracts
As of December 31,
2003
2004
ThCh$
ThCh$
3,668,231
7,945,313
380,301
3,979,395
3,981
7,350
7,016,631
7,106,355
-
604,430
1,258,523
7,752,331
Total
27,395,174 12,327,667
In November 2003 the Company obtained a new loan of
US$500 million which meant incurring in expenditures required
to obtain the loans, which are amortized in the same term as the
debt.
At December 31, 2004, the balance to amortize was recorded
under Other current assets for ThCh$1,416,151 (ThCh$2,016,936
in 2003) and under Other long-term assets for ThCh$3,668,231
(ThCh$7,945,313 in 2003).
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
277
N OTE 11. D U E TO BAN KS AN D FI NAN CIAL I NSTITUTI O NS
a) Current portion of long-term debt due to banks and financial institutions:
Financial Institution
ABN Amro Bank
Banco Bilbao Vizcaya Argentaria S.A.
Citibank, N.A., acting through its International Banking Facility
SAN PAOLO IMI S.P.A.
Caja de Ahorros y Monte de Piedad de Madrid, Caja Madrid
Banco Santander Central Hispano
Bank of Tokio - Mitsubishi
Deutsche Bank
BNP Paribas, Sucursal en España
Credit Lyonnais New York Branch
NORD/LB NORDDEUTSCHE LANDESBANK GIROZENTR
ING Bank N.V., Curaçao Branch
WestLB AG, New York Branch
Banco Español de Crédito, S.A., New York Branch
DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt
Total
Percentage of debt in foreign currency:
Percentage of debt in local currency:
Total
Currency
US$
Other foreign
U.F.
Ch$
As of December 31,
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
ThCh$
ThCh$
ThCh$ ThCh$
ThCh$ ThCh$
ThCh$ ThCh$
ThCh$
ThCh$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
202,375
-
121,425
121,425
202,374
121,424
40,475
-
-
-
-
-
-
-
7,960
7,960
-
7,959
7,958
-
-
-
-
-
-
-
-
-
809,498 31,837
-
202,375
-
121,425
121,425
202,374
121,424
40,475
-
-
-
-
-
-
-
-
7,960
7,960
-
7,959
7,958
-
-
-
-
-
-
-
-
-
809,498 31,837
As of December 31,
2004
%
100.00
-
2003
%
100.00
-
100.00 100.00
N OTE 12. LO N G -TER M P O RTI O N O F D EBT D U E TO BAN KS AN D FI NANCIAL I NSTITUTI O NS
Financial Institution
Currency
Banco Bilbao Vizcaya Argentaria S.A.
Citibank, N.A., acting through its International Banking Facility
Banco Santander Central Hispano S.A.
The Bank of Tokyo-Mitsubishi, Ltd., New York Branch
SAN PAOLO IMI S.p.A.
Caja de Ahorros y Monte de Piedad de Madrid, Caja Madrid
Deutsche Bank AG, New York Branch
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
Years to maturity
After 1 year After 2 year After 3 year After 5 year
but within
but within
10 years
2 years
ThCh$
ThCh$
but within
3 years
ThCh$
Total
long-term
portion
ThCh$
Average
annual
interest
rate
%
3.42%
Total
long-term
portion- 2003
ThCh$
76,080,625
After 10 years
years
Thch$
-
-
-
-
-
-
-
- 48,772,500
48,772,500
- 48,772,500
-
-
- 48,772,500
-
0.00%
- 3.42%
- 3.42%
3.42%
- 3.42%
-
-
-
-
-
76,080,625
45,648,375
45,648,375
45,648,375
15,216,125
but within
5 years
ThCh$
48,772,500
48,772,500
48,772,500
-
-
48,772,500
-
Total
-
-
195,090,000
-
-
- 195,090,000
304,322,500
Percentage of debt in foreign currency:
Percentage of debt in local currency:
Total
As of December 31,
2003
2004
%
%
100.00
100.00
-
-
100.00
100.00
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
278
On April 15, 2004, Enersis S.A. prepaid US$ 150 million of the
syndicated loan obtained in November, 2003, for US$ 500 million.
The US$350 million balance was refinanced in November, 2004,
through revolving overdraft lines whose expiration term is 4 years.
It is possible to prepay and draw during the contract effectiveness.
The interest (spread) depends or the corporate rating given by S&P.
Currently it is BBB, for which initially it will be 0.375%.
The US$ 350 million balance was refinanced in November,
2004, through revolving overdraft lines whose expiration term
is 4 years. It is possible to prepay and draw during the contract
effectiveness. The interest (spread) depends or the corporate rating
given by S & P. Currently BBB-, for which initially it will be 0.375%.
N OTE 13. OTHER CU RRENT LIABILITIES
Other current liabilities at each year-end are as follows:
Fair value - derivative contracts
Swap collar rate contract
2003
ThCh$
As of December 31,
2004
ThCh$
14,051,088
59,127,083
-
9,641,028
Total
9,641,028
73,178,171
N OTE 14. BO N DS PAYABLE
a) Details of the current portion of bonds payable is as follows at each year-end:
Instrument
Yankee Bonds
Yankee Bonds
Yankee Bonds
Yankee Bonds II
Bono N° 269
Bono N° 269
Total
Face value
Series
outstanding
Currency
Interest
rate
Maturity
date
1
2
3
1
B-1
B-2
300,000,000
350,000,000
858,000
350,000,000
45,167
1,935,000
US$
US$
US$
US$
U.F.
U.F.
6.90%
7.40%
6.60%
7.38%
5.50%
5.75%
01-12-2006
01-12-2016
01-12-2026
01-12-2014
15-06-2009
15-06-2022
As of December 31,
2003
ThCh $
1,049,913
1,313,658
2,872
1,571,066
156,578
79,276
2004
ThCh $
961,515
1,203,055
2,630
6,743,476
72,621
79,158
4,173,363
9,062,455
b) Details of the long-term portion of bonds payable is as follows at each year-end:
Instrument
Yankee Bonds
Yankee Bonds
Yankee Bonds
Yankee Bonds II
Bono N° 269
Bono N° 269
Total
Series
Face value
outstanding
Currency
Interest
rate
Maturity
date
1
2
3
1
B-1
B-2
300,000,000
350,000,000
858,000
350,000,000
45,167
1,935,000
US$
US$
US$
US$
U.F.
U.F.
6.90%
7.40%
6.60%
7.38%
5.50%
5.75%
01-12-2006
01-12-2016
01-12-2026
01-12-2014
15-06-2009
15-06-2022
As of December 31,
2003
2004
ThCh$
ThCh$
167,220,000
182,593,500
213,025,750 195,090,000
478,249
213,025,750 195,090,000
642,009
33,508,492
696,053
33,558,705
522,217
c) Bonds payable are comprised of the following:
Series
i.
Enersis S.A. Series B1-B2
On September 11, 2001, Enersis S.A. registered two series of
bearer bonds as of June 14, 2002, as follows:
B1
B1
B2
B2
643,421,975 592,028,750
Total amount In
UF
1,000,000
3,000,000
1,000,000
1,500,000
N° of bonds per series
1,000
300
1,000
150
Face value In
UF
1,000
10,000
1,000
10,000
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
279
The scheduled maturity of the Series B-1 bonds is 8 years,
interest and principal payable semi-annually. Annual interest
is 5.50%, compounded semi-annually.
The scheduled maturity of the Series B-2 bonds is 21 years,
principal payments beginning after 5 years, interest and
principal payable semi-annually. Annual interest is 5.75%,
compounded semi-annually.
In November 2003, these series were voluntarily exchanged
for shares in connection with the capital increase. The holders
converted ThCh$63,656,587 (historical) into 893,612,466
first issue shares. Underwritten amounts were determined
by experts. Capitalized amounts were ThCh$46,968,179
(historical) for the B1 series and ThCh$7,028,065 (historical)
for the B2 series.
Interest is paid on a semi-annual basis and principal is due
upon maturity.
During the second half of 2004, second half, debts have been
re-nominated through US$/UF swap contracts for the total of this
issue.
iv. Discount on bonds placed
The discounts on Enersis S.A. bonds placed have been deferred
over the same periods as the periods of the related bonds issues.
The balance at December 31, 2004 amounts to ThCh$7,016,631
(ThCh$7,106,355 in 2003), are included in “Other assets” and
ThCh$926,826 (ThCh$683,192 in 2003) are included in “Other
current assets”.
ii. Yankee Bonds
On November 21, 1996, the Company, acting through its agency
in the Cayman Islands, issued corporate notes (Yankee Bonds)
for US$800 million in three series, as follows:
Series
1
2
3
Total amount
In US$
300,000,000
350,000,000
150,000,000
Years to maturity
10
20
30
Stated annual
interest rate
6.90%
7.40%
6.60%
Interest is payable on a semi-annual basis and principal is
due upon maturity. The Series 3 bond holders has a pre-
redemption option in year seven, which was exercised by nearly
all holders in November 2003 for US$149,142,000.
During 2004 second half, debts have been re-nominated
through UF/US $ s wap contrac t s for an amount o f
US$100,000,000 associated to the tranche 1 bond and
US$250,000,000 associated to tranche 2.
N OTE 15. ACCRU ED E XPENSES
a) Short-term accruals:
Accrued expenses included in current liabilities as of each year-
end are as follows:
Negative equity of investments
Profit sharing and other employee benefits
Commission banks provision
Contracts collar expeneses provision
Notes receivable provision
As of December 31,
2003
2004
ThCh$
ThCh$
14,600,121
11,390,613
2,308,813
2,088,763
-
1,485,095
-
5,875,944
1,103,161
1,342,935
Total
22,183,350 18,012,095
(*) Provision for ownership in negative equity of Luz de Rio Limitada and Endesa Market Place
for ThCh$14,374,557 (ThCh$11,159,410 in 2003 and ThCh$225,564 (ThCh$231,203 in 2003)
respectively.
During 2003 and 2004 there were no debt write-offs.
iii. Yankee Bonds II
b)
Long-term accruals:
Accrued expenses included in long term liabilities as of each
year-end are as follows:
On November 24 2003, the Corporation, through its Cayman
Islands Agency, issued and placed Yankee Bonds on the
American market for US$350 million. This placement was
made in a single Series, whose features are as follows:
As of December 31,
2003
ThCh$
1,998,543
566,869
2004
ThCh$
1,797,742
767,329
Series
1
Total amount
In US$
350,000,000
Years to maturity
10
Stated annual
interest rate
7.375%
Severance indemnities
Post-retirement benefits
Total
2,565,412
2,565,071
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
280
At June 30, 2003, end date of the first preferential underwriting
period, 22,113,264,060 shares were underwritten for a sum of
Ch$1,336,087,841,061 equivalent to 90.69% of the total issue. Of total
shares underwritten in this preferential period, 14,406,840,511 shares
were taken up by controlling shareholder Elesur for the equivalent of
Ch$870,464,185,043 pesos and 7,706,423,549 shares by minority
shareholders for the equivalent of Ch$465,623,656,018 pesos.
Elesur underwrote and paid in its shares by capitalizing the
financial credits that it held with Enersis on the date of underwriting,
which, according to expert report drawn up by Mr. Eduardo
Walker, which was approved by the Extraordinary Shareholders’
Meeting on March 31, 2003, amounts to 86.84% of its par
value, with the difference being recorded as a share premium of
Ch$131,912,812,936.
The second preferential underwriting period in November
2003 involved the voluntary exchange of 269 bonds, series B1 and
B2. Holders converted Ch$63,656,586,836 into the equivalent of
893,612,466 first issues shares; the amounts underwritten were
determined by experts by capitalizing Ch$46,964,178,894 for series B1
and Ch$7,028,065,024 for series B2, at Ch$ 60.4202 per share. This
operation meant recording a share premium of Ch$6,247,821,056.
During the second preferential underwriting period,
1,244,542,758 shares equivalent to Ch$75,195,523,918 were
subscribed.
The second share underwriting period concluded on December
30, 2003, determining the capital increase, in which 99.9% of
the capital authorized by the Extraordinary General Meeting of
Shareholders, in other words 24,360,146,365 shares, was subscribed,
leaving Enersis’ capital with a total of 32,651,166,465 subscribed
and paid in shares.
b) Dividends
During the years ended December 31, 2003 and 2004 the
Company no paid dividends
c) Number of shares
As of December 31, 2004 and December 31, 2003, respectively
the number of shares authorized, issued and outstanding was
32,651,166,465 all of which have voting rights.
N OTE 16. SE VER ANCE I N D EM N ITIES
Include employee severance indemnities, calculated in
accordance with the policy described in Note 2n, post-retirement
benefits and others. An analysis of the changes in the accruals in
each year is as follows:
Opening balance as of January 1
Increase in accrual
Payments during the year
As of December 31,
2003
ThCh$
1,474,295
922,551
(398,303)
2004
ThCh$
1,949,797
126,497
(278,552)
Total
1,998,543
1,797,742
N OTE 17. SHAREH O LD ERS’ EQ U IT Y
a) Paid capital
The Extraordinary General Meeting of Shareholders of Enersis
held on March 31st 2003 approved a capital increase of about
US$2,000 million. The issue was registered in the Securities Register
on May 23 2003 under No. 686 for Ch$1,473,225,403,563 pesos,
divided into 24,382,994,488 shares. The operation was structured
as follows:
1)
2)
3)
First preferential underwriting period (from May 31 to June 30),
in which shareholders registered in the company register at
last May 26 have the option of taking up 2.9408 new shares
for each old one at a price of Ch$60.4202 per share.
Voluntary redemption of local bonds (from November 1 to 15),
in which holders of local 269 bonds (series B1 and B2) may
exchange their bonds for Enersis shares, according to the value
assigned by the aforementioned independent expert and at
placement price - Ch$ 60.4202 per share.
Second preferential underwriting period (from November 20
to December 20), in which all Enersis shareholders registered
five working days before the start of this new period, except for
the controlling partner and its members, may participate.
In this phase, shareholders may take up the remaining
shares that were not underwritten at the close of the preferential
underwriting period and at the conclusion of the voluntary redemption
of local bonds. In this period, new issue shares may only be paid in
cash at the same price of Ch$ 60.4202 per share.
Once the deadline for the capital increase has expired
(December 30, 2003), its final amount will be the amount actually
underwritten and paid in.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
281
d) Subscribed and paid capital is as follows as of the
e) Accumulated net income (losses) of development-
year-end:
stage subsidiaries are as follows:
As of January 1,
Intercompany loan capitalization
Bonds capitalization
Subscribed shares
As of December 31,
2004
ThCh$
2003
ThCh$
777,688,287 2,283,404,124
890,441,338
55,176,024
560,098,475
Company
Central Generadora
Termoelectrica Fortaleza S.A.
As of December 31, 2004
Net income (loss)
for the period
ThCh$
Retained earnings
(accumulated deficit)
ThCh$
(2,673,664)
Total
-
(2,673,664)
As of December 31,
2,283,404,124 2,283,404,124
f) Other information
Detail of other reserves is as follows:
Reserve for transaction entities using remeasurement method
Reserve for accumulated conversion differences
Reserve for Technical Bulletin No. 72 (1)
Initial
balance at
January 1, 2004
ThCh$
(10,499,405)
(15,814,072)
-
Reserve
for the period
ThCh$
(4,435,524)
(103,832,123)
11,992,130
Final
balance at
December 31, 2004
ThCh$
(14,934,929)
(119,646,195)
11,992,130
Total
(26,313,477)
(96,275,517)
(122,588,994)
Detail of changes in the reserve for accumulated conversion differences are as follows for the year ended December 31, 2004:
Cumulative translation adjustment
Initial
balance at
January 1, 2004
ThCh$
(15,814,072)
Reserve
for assets
ThCh$
(109,623,996)
Reserve for
liabilities
ThCh$
5,791,873
Final
balance at
December 31, 2004
ThCh$
(119,646,195)
Total
(15,814,072)
(109,623,996)
5,791,873
(119,646,195)
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
282
The detail of the accumulated conversion difference reserve
N OTE 18. OTHER I NCOME AN D E XPENSES
at December 31, 2004 is as follows:
Distrilec Inversora S.A.
Inversiones Distrilima S.A.
Cía. Peruana de Electricidad S.A.
Edesur S.A.
Compañía de Electricidade do Rio de Janeiro S.A.
Luz de Bogotá S.A.
Investluz S.A.
Central Geradora Termelétrica Fortaleza S.A.
Enersis Energía de Colombia
Endesa Market Place
Endesa Argentina S.A.
Endesa Chile Interncional S.A.
Codensa S.A.
Endesa de Colombia S.A.
Central Costanera S.A.
Conosur S.A.
Capital de Energía S.A.
Ingendesa Do Brasil Ltda.
ThCh$
(16,109,082)
(6,111,287)
(36,678)
(19,299,737)
(35,101,980)
2,361,312
(1,981,396)
(4,131,448)
(561,859)
376,205
8,772
(3,028,008)
(27,711,750)
70,212
(307,841)
(8,001,621)
(8,544)
(71,465)
a) The detail of other non-operating income in each
year is as follows:
As of December 31,
2003
ThCh$
2004
ThCh$
Adjustments to investment in related companies
299,592
865,132
Proyect administration, maintenance and construction
9,048,147
8,603,548
Gain on sales of Compañía Eléctrica del Río Maipo S.A. 90,022,773
-
Other
Total
2,855,589
526,340
102,226,101 9,995,020
b) Other non-operating expenses in each year are as
follows:
As of December 31,
2003
ThCh$
2004
ThCh$
Total
(119,646,195)
Provision of negative equity of Luz de Rio Ltda.
12,421,395
1,079,587
Adjustments to investments in related companies
2,420,753
404,108
Fair value swap US$/UF
Provisions
Other tax expenses
Other
Total
-
13,326,522
5,875,946
767,530
-
-
2,201,101
1,149,791
23,686,725 (15,960,008)
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 19. PRICE-LE VEL RESTATEMENT
The (charge) credit to income for price-level restatement as of each year-end is as follows:
283
Assets
Property, plant and equipment
Accounts receivable from subsidiaries short-term
Accounts receivable from subsidiaries short-term
Accounts receivable from subsidiaries long-term
Investment in subsidiaries
Investment in other companies
Amortization of goodwill
Current assets
Other assents
Credit for cost and expense accounts
Net credit-assets
Liabilities and Shareholders´ equity
Shareholders´equity
Current liabilities and long- term
Accounts payable to subsidiaries short-term
Accounts payable to subsidiaries long-term
Due to banks and financial institutions short-term
Due to banks and financial institutions long-term
Bonds payable long-term
Non monetary liabilities
Charge to income accounts
Index
As of December 31,
2003
ThCh$
144,975
1,203,042
162
4,227,842
17,878,118
7,391,760
7,325,644
7,186
72,301
38,096
2004
ThCh$
336,813
730,837
1,198,133
8,721,259
43,433,674
10,560,355
18,445,562
27,959
9,918,959
307,069
38,289,126
93,680,620
(7,113,470)
(63,692,887)
16,094
(272,181)
-
(11,473,763)
60,686
(16,043,402)
(2,209,726)
(11,297,311)
-
(55,763)
-
(5,107,139)
(5,500,995)
(14,857,900)
(1,375,810)
637,956
-
(352,902)
I.P.C.
I.P.C.
U.F.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
I.P.C.
U.F.
I.P.C.
U.F.
I.P.C.
I.P.C.
I.P.C.
U.F.
I.P.C.
Net charge-liabilities and shareholders´equity
(42,825,978)
(95,812,535)
Net credits (charges) to income
(4,536,852)
(2,131,915)
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
284
N OTE 20. E XCHAN GE D IFFEREN CES
The (charge) credit to income for foreign currency translation as of each year-end is as follows:
Assets
Current assets
Cash
Time deposits
Other current assets
Amounts due from related companies
Non-current assets
Amounts due from related companies
Forward
Investment in other companies
As of December 31 ,
Liabilities
Currency
2003
ThCh$
2004
ThCh$
Current liabilities
Currency
US$
US$
US$
US$
US$
US$
US$
101,719
425,827
Due banks and financial institutions
(17,050,586)
(1,329,942)
Amount payable to related companies
(162,567)
(157,456)
(97,199)
Forward
607,795
Other liabilities
Long-term liabilities
(99,375,631)
(25,123,690)
Due banks and financial institutions
22,423,766
- Bonds payable
-
(2,195,183)
Amount payable to related companies
US$
US$
US$
US$
US$
US$
US$
As of December 31 ,
2003
ThCh$
2004
ThCh$
683,497
-
316,234
2,065,808
(10,754,914)
3,870,965
(65,769)
28,554
65,679,669
22,551,689
(37,997)
4,292,202
69,696,510
-
Total gain (loss)
(94,220,755)
(27,712,392)
Total gain (loss)
125,517,230
32,809,218
Exchange difference- net income (loss)
31,296,475
5,096,826
N OTE 21. C ASH FLOW STATEMENT
N OTE 22. SHARE ISSUANCE COSTS
a) Other financing receipts:
Forward contract payments
As of December 31
2003
ThCh$
18,153,248
2004
ThCh$
12,644,430
Total
18,153,248
12,644,430
b) Other financing disbursements:
Commissions on debt refinancing
Forward contract payments
Collar and collateral derivative contracts premiums
Payments by bond issue
Others
As of December 31
2003
2004
ThCh$
ThCh$
1,629,494
40,958,730
-
15,108,962
-
5,595,666
1,082,933
-
-
148,759
Total
61,812,117 2,712,427
Expenses incurred at the close of these financial statements
for issuing and placing the shares, outstanding at December 30,
2003, were recorded as described in Note 2 v) and break down as
follows:
Appraisal services
Printing costs
Legal cost
Financial adviser
DCV commissions
Bank commissions
Risk classification services
As of December 31
2003
ThCh$
77,209
14,303
204,989
10,637,039
3,065
1,485,095
143,103
2004
ThCh$
77,209
14,303
204,989
10,734,121
3,065
1,968,639
143,103
Total
12,564,803
13,145,429
During the current fiscal year expenses for bank commissions
have been acknowledged for M$ 469,460, and expenses for financial
consulting for M$ 94,254 regarding capital increase.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
285
N OTE 23. FI NANCIAL D ERIVATIVES
As of December 31, 2004 the Company and held the following financial derivative contracts with financial institutions with the object
of decreasing exposure to interest rate and foreign currency risk, as follows:
Type
Nominal
Date of
Type Contract
Amount
Maturity
Item
Sales/
Purchase
Hedged
Item
US$
Amount
Hedged
item
ThCh$
Amount
ThCh$
Accounts
Assets / Liabilities
Income
Account
Amount
ThCh$
Realized
Unrealized
ThCh$
ThCh$
OE
S
S
S
CCTE
CCPE
CCPE
CCPE
350,000,000
II- 2006 Interest rate
350,000,000
I- 2014
Exchange rate
100,000,000
IV-2006 Exchange rate
250,000,000
IV-2016
Exchange rate
P
P
P
P
Bank obligations
195,090,000
195,090,000 Other liabilities long-term (1,802,583)
(3,811,376)
(544,059)
Other current assets
195,090,000
195,090,000 Other liabilities long-term (15,541,547)
859,202
(15,541,547)
Other current assets
55,740,000
55,740,000 Other liabilities long-term (7,238,283)
341,449
(7,238,283)
Other current assets
139,350,000
139,350,000 Other liabilities long-term (522,520)
785,315
(522,520)
(1)
Fr = Forward, S = Swap
NOTE 24. COM MITMENTS AND CO NTINGENCIES
Arbitration Court had been processed on the request of the Republic
of Argentina.
a) Litigation and other legal actions:
Plaintiff
:
:
Defendant
Court
:
Case/Identification :
Enersis S.A., Chilectra S.A., Empresa
Nacional de Electricidad S.A., Elesur S.A.
The Republic of Argentina
CIADI Arbitration Panel
(CIADI Case # ARB/03/21)
Compensation for losses caused to the Plaintiff is investment
in the Republic of Argentina is requested in connection with the
participation in the power distribution concessionaire Edesur S.A. on
the grounds of violation of the Investment Protection and Promotion
Agreement entered into by the Republics of Chile and Argentina, and
the Argentinean Government behavior through the passing of Public
Emergency Law 25,561, dated January 6, 2002. The said behavior
has also seriously affected the economic and financial balance of
the Granting Contract between Edesur S.A. and the Argentinean
National State. The said Law authorized a re-negotiation process
of the Granting Contracts with the purpose of re-composing the
economic-financial equation affected by the conversion to pesos,
at US$ 1 = $ 1, of tariff values calculated in American dollars, and
the prohibition to apply biased tariff updating. In the practice, this
process has not been promoted by the Government, and no measures
to prevent losses for the Plaintiff have been formalized. Edesur S.A.
has been deprived of receiving the tariffs indicated in the regulations
and in the said Granting Contract, being therefore harmful for the
investment the Plaintiff companies have made.
Process status: On October 18, 2004, a copy of the lack of
jurisdiction petition filed by the Republic of Argentina was received. On
December 17, 2004 the said petition was answered and confirmation
of the CIADI jurisdiction was requested. Lack of jurisdiction of the
Amount involved:
US$ 574,739,500.
b) Restrictions:
The Company’s loan agreements establish an obligation to
comply with the following financial ratios, on a consolidated
level:
Enersis’s ratio between debt and cash flow for four quarters
and that of its Chilean subsidiaries did not exceed 7.0x;
The ratio of consolidated debt to EBITDA for four consolidated
quarters, not exceeding 5.0x;
The ratio of Enersis and its Chilean subsidiaries cash flow to
financial expenses for four quarters, not less than 1.6x;
The ratio of consolidated debt to shareholders’ equity plus
minority interest not exceeding 80%;
Assets corresponding to companies whose business is regulated,
is not to be less than 50% of the total consolidated assets.
M i n i m u m s h a r e h o l d e r s ’ e q u i t y a t l e a s t e q u a l t o
ThCh$456.840.000 (U.F.27 million)
As of December 31, 2004 all these obligations have been
•
•
•
•
•
•
•
met.
As a common and habitual practice for some bank loan debts
and also in capital markets, a substantial portion of Enersis S.A.’s
financial indebtedness is subject to cross-failure provisions. Some
failures of relevant subsidiaries, if not corrected in time (as to those
specific provisions allowing a year of time to correct the problem),
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
286
might result in the cross-failure at the Endesa-Chile and Enersis
S.A. level., and, in this case, significant percent of Enersis S.A.’s
consolidated liabilities might eventually become on demand.
Non-payment, after any applicable grace period, of these
companies’ debts or of those corresponding to some of their most
relevant subsidiaries for an individual amount exceeding the
equivalent of 30 million dollars, would cause advanced payment
of syndicated credits contracted in 2004. Also, non-payment, after
any applicable grace period, of these companies’ debts or of those
corresponding to any of their subsidiaries for individual amounts
exceeding the equivalent of 30 million dollars, would cause advanced
payment of Yankee bonds. In addition, some credit agreements
contain provisions according to which certain events different from
non-payment in these companies or in any of their most relevant
subsidiaries, such as bankruptcy, insolvency, adverse executed legal
sentences for amounts larger than US$ 50 million, and expropriation
of assets, may cause those credits acceleration declaration.
There are no clauses in the credit agreements through which
changes in these companies corporate or debt classification by risk
classification agencies may cause and obligation to make debt
prepayments. However, according to the Standard & Poor (S&P)
risk classification agency, a variation in the foreign currency debt
risk classification produces a change in the applicable margin of
syndicated credits contracted in 2004.
N OTE 25. SU RE TIES O BTAI N ED FROM TH IRD PARTIES
As of December 31, 2004, the Company has received sureties as follows:
Operation
Contractor
CIA. DE TELECOMUNICACIONES DE CHILE
METROPOLIS INTERCOM S.A.
COMPLEJO MANUFACTURERO DE EQUIPOS TELEFONICOS
AT & T CHILE NETWORKS S.A.
GTD TELEDUCTOS
SMARTCOM S.A.
EMPRESA NACIONAL DE TELECOMUNICACIONES
AGUAS ANDINA
BELLSOUTH COMUNICACIONES
Support contract
Support contract
Seriousness of supply
Support contract
Support contract
Supplies Enersis
Support contract
Support contract
Support contract
Others
Total
As of December 31, 2003, the Company has received sureties as follows:
Operation
Contractor
METROPOLIS INTERCOM
CIA. DE TELECOMUNICACIONES DE CHILE
VTR GLOBAL COM
GTD TELESAT S.A.
AT & T CHILE NETWORKS S.A.
EMPRESA NACIONAL DE COMUNICACIONES
Support contract
Support contract
Support contract
Support contract
Support contract
Support contract
Others
Total
Relation
Third
Third
Third
Third
Third
Third
Third
Third
Third
Relation
Third
Third
Third
Third
Third
Third
Third
Amount
ThCh$
51,085
53,943
34,634
17,317
17,317
17,317
15,759
8,658
8,658
18,306
242,994
Amount
ThCh$
54,024
51,162
22,754
17,343
17,343
15,782
55,377
233,785
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
N OTE 26. FO REI G N CU RRENCIES
As of December 31, 2003 and 2004, foreign currency denominated assets and liabilities are as follows:
287
a) Current assets
Account
Cash
Time deposits
Notes receivables
Other receivables
Amounts due from related companies
Income taxes recoverable
Prepaid expenses
Deferred income taxes
Other current asset
Total current assets
b) Property, plant and equipment
Account
Buildings and infraestructure
Machinery and equipment
Other fixed assets
Technical appraisal
Depretiation
Total property, plant and equipment
Currency
Ch$
US$
US$
Ch$
Ch$
Ch$
US$
U.F.
Ch$
Ch$
Ch$
Ch$
US$
Currency
Ch$
Ch$
Ch$
Ch$
Ch$
As of December 31,
2003
ThCh$
184,108
157,133
1,181,114
755
1,774,192
116,268,976
11,810,607
482,975
14,843,891
55,432
28,516,072
8,672,345
8,631,079
2004
ThCh$
(52,007)
134,274
9,176,155
737
2,227,626
-
13,503,823
13,222,266
148,196
-
-
42,802,273
18,136,958
192,578,679
99,300,301
As of December 31,
2003
ThCh$
21,318,189
2,359,443
818,188
34,005
(11,919,198)
2004
ThCh$
21,318,134
2,196,587
1,158,196
33,988
(12,530,600)
12,610,627
12,176,305
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
288
c) Other assets
Account
Investment in related companies
Investment in other companies
Goodwill, net
Negative goodwill, net
Other receivables
Amount due from related companies
Intangibles
Less: Acculated amortization
Other assets
Total other assets
Total assets by currency
Total
d) Current liabilities
Currency
Ch$
US$
US$
Ch$
US$
Ch$
US$
Ch$
US$
U.F.
Ch$
Ch$
Ch$
US$
Ch$
US$
U.F.
As of December 31,
2003
ThCh$
1,730,514,818
496,366,852
-
750,232,740
2,873,795
(130,805)
(491,129)
487,265
451,554,968
-
1,473,876
(434,208)
19,038,412
8,356,762
2004
ThCh$
1,825,816,192
424,407,018
15,508,173
699,330,602
7,025,288
(114,952)
(520,473)
-
344,094,100
89,953,435
1,473,876
(508,041)
12,327,667
-
3,459,843,346
3,418,792,885
2,684,108,496
980,441,181
482,975
2,627,121,059
813,046,801
90,101,631
3,665,032,652
3,530,269,491
Account
Currency
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
ThCh$
%
ThCh$
%
ThCh$
%
ThCh$
%
Within 90 days
91 days to 1 year
As of December 31, 2003 As of December 31, 2004 As of December 31, 2003
As of December 31, 2004
Due to banks and financial institutions
Bonds payable
Dividends payable
Accounts payable
Miscellaneous payables
Amounts payables to related companies
Accrued expenses
Withholdings
Income tax payable
Deferred income
Other current liabilities
Total current liabilities
US$
U.F.
US$
Ch$
Ch$
US$
Ch$
U.F.
Ch$
US$
Ch$
Ch$
Ch$
Ch$
$ no Reaj.
US$
$ no Reaj.
U.F.
Ch$
US$
-
-
235,854
5.06
3,937,509
114,402
177,329
-
247,085
-
-
-
-
-
-
-
31,837
151,779
8,910,676
53,507
187,258
-
94,604
-
30,983,207
4.92
74,817,636
52,779
2,088,763
136,704
16,691,677
139,111
-
8,680,005
-
235,854
50,578,278
12,670,293
-
-
-
-
-
-
-
-
53,471
3,637,538
193,498
-
31,379
-
98,023
446,036
151,779
79,461,456
9,094,007
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
809,498
3.35
-
-
-
-
-
-
-
-
-
-
-
-
2,406,565
5.16
-
-
-
-
-
-
-
-
-
-
1,366,894
20,094,587
-
-
-
-
-
-
2,406,565
20,094,587
2,176,392
-
-
-
-
-
-
-
-
-
1,251,809
14,374,557
-
-
-
-
-
-
-
14,374,557
1,251,809
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total current liabilities
63,484,425
88,707,242
24,677,544
15,626,366
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
289
e)
Long-term liabilities, December 31, 2004
Account
Currency
1 to 3 years
3 to 5 years
5 to 10 years
Amount
ThCh$
Avg Rate
%
Amount
ThCh$
Avg Rate
%
Amount
ThCh$
Avg Rate
%
More than 10 years
Amount
ThCh$
Avg Rate
%
Due to banks and financial institutions
Bonds payable
Accrued expenses
Deferred income taxes
Other liabilities
Total long-term liabilities
by currency
US$
U.F.
US$
Ch$
Ch$
US$
U.F.
Ch$
US$
-
2,411,939
-
-
3,520,749
73,178,171
2,411,939
76,698,920
-
-
-
-
-
-
-
195,090,000 2.84
3,238,023
-
-
-
-
3,238,023
-
195,090,000
-
-
-
-
9,088,115
-
-
-
-
767,329
6.50
-
-
-
-
9,088,115
767,329
-
-
19,412,424
557,878,249
1,797,742
-
-
19,412,424
1,797,742
557,878,249
-
-
7.39
6.50
-
-
Total current liabilities
79,110,859
198,328,023
9,855,444
579,088,415
f)
Long-term liabilities, December 31, 2003
Account
Currency
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
Amount
Avg Rate
1 to 3 years
3 to 5 years
5 to 10 years
More than 10 years
Due to banks and financial institutions
Bonds payable
Amounts payables to related companies
Deferred income taxes
Other liabilities
Total long-term liabilities
by currency
US$
U.F.
US$
Ch$
US$
Ch$
US$
U.F.
Ch$
US$
ThCh$
%
ThCh$
%
ThCh$
%
ThCh$
%
-
- 304,322,500
3
-
-
-
-
954,080
6
3,152,900
0.0554
8,694,941
0.0563
21,452,837
0.0575
-
-
-
4,818,080
-
9,641,028
954,080
4,818,080
-
182,593,500
0.069
-
- 426,573,717
0.0738
-
-
-
-
-
-
-
-
-
3,152,900
486,916,000
-
-
-
-
566,869
0.095
1,998,543
0.095
-
-
-
-
-
-
-
-
-
-
-
-
8,694,941
566,869
-
21,452,837
1,998,543
426,573,717
Total long-term liabilities
15,413,188
490,068,900
9,261,810
450,025,097
N OTE 27. SANC TI O NS
N OTE 29. ENVIRO N MENT
The Company and its directors has not been the subject to
As of December 31, 2004, the Company has not incurred in
sanctions by the SVS nor by any other administrative authorities.
environmental expenses.
N OTE 28. SU BSEQ U ENT E VENTS
No significant events that might affect these financial
statements have occurred in the period from January 1, 2005 to
their date of issue.
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
290
U N C O N S O L I D A T E D M A T E R I A L I N F O R M A T I O N
CER J C APITAL I NCRE ASE
The company informed the regulatory authority on March 1 and
25, 2004 about progress and the conclusion of the capital increase of the
Brazilian electricity distribution subsidiary, Cerj, as follows:
1.
2.
3.
4.
5.
The Brazilian subsidiary of Enersis S.A., Companhia de Eletricidade do
Río de Janeiro S.A. (Cerj) has made and concluded a capital increase
amounting to BR$710,000,000 (approximately US$243 million)
through the issue of 1,339,622,641,509 new common shares at
BR$0.53 for every 1,000 shares.
On February 27, 2004, and within the financial strengthening plan
for its subsidiary Cerj, Enersis subscribed, through its subsidiary
Enersis Internacional, for a total of 1,335,849,056,604 shares in
the new issue of Cerj, corresponding to the whole of the rights of the
Contolling Group (99.3% approximately) in this company. Endesa
Spain, Electricidade de Portugal S.A. and Chilectra S.A. (the members
of the Controlling Group) had previously ceded their preemptive rights
to Enersis which therefore subscribed for its own rights and those
thus ceded to it. In addition, Enersis, acting as above, subscribed
during the offer of the remaining portion of this capital increase that
was not acquired by the minority shareholders in Cerj, i.e. a further
3,771,390,630 common shares. Enersis, through its subsidiary Enersis
Internacional, therefore subscribed for a total of 1,339,620,447,234
new Cerj common shares.
Enersis has paid for the shares subscribed for through the capitalization
of various loans that had made indirectly to Cerj.
Enersis will transfer to its subsidiary Chilectra, operating directly or
through its agency and 10 subsidiaries, 760,255,861,477 shares issued
by Cerj that were recently subscribed by Enersis in the above capital
increase. This transfer will be made at BR$0.53 for every 1,000 shares
of Cerj. As a result of this share sale, the shareholdings in Cerj will be
as follows: Electricidade de Portugal 7.70%, Endesa Spain 10.71%,
Enersis 35.13%, Chilectra 46.10% and others 0.36%.
As a result of the above subscription by Enersis of the capital increase
in Cerj and the share transfer to Chilectra, the subsidiary Cerj has
reduced its debt substantially, without causing any effects to the
results of Enersis.
Registration of International Bonds with the Securities and Exchange
Commission, SEC.
1.
2.
3.
In November 2003, Enersis, acting through its Agency in Cayman
Islands (hereinafter Enersis), placed bonds, not registered with the
SEC, with institutional investors on the American and European
markets under Rules 144A and S for a total of US$350 million, as
was informed at the time. These bonds were later listed on the
Luxembourg Stock Exchange.
In accordance with the respective Offering Memorandum dated
November 19, 2003, Enersis has obtained, on August 6, 2004, the
registration with the SEC of a new bond issue through the approval
of the document called F-4/A. This registration will enable, within
a sole period of at least 20 business days, the holders of the issue
mentioned in 1. above to exchange these for the new bonds as
described below.
The new bonds will also be issued by Enersis, in the same way as
described in 1. above, for a total amount of up to US$ 350 million
repayable in full on January 15, 2014 and with an interest coupon of
7.375% p.a. The new bonds will have the same financial characteristics
as the bonds issued November 2003, except that their registration
with the SEC will give these securities greater potential liquidity to the
benefit of their bond-holders. Once the exchange period is concluded,
these will be issues by Enersis and listed on the Luxembourg Stock
Exchange.
Interim Dividends
The board of Enersis, on January 28, 2004, agreed unanimously not to
distribute an interim dividend in February 2004 against the results of 2003,
in accordance with the current dividend policy, because the conditions for
doing so, as set out in that dividend policy, were not met.
The board of Enersis, on April 28, 2004, agreed unanimously not
to distribute an interim dividend in May 2004 against the results to March
2004, in accordance with the current dividend policy, because the conditions
for doing so, as set out in that dividend policy, were not met.
The board of Enersis, on July 28, 2004, agreed unanimously not to
distribute an interim dividend in August 2004 against the results to June
2004, in accordance with the current dividend policy, because the conditions
for doing so, as set out in that dividend policy, were not met.
The board of Enersis, on October 27, 2004, agreed unanimously not
to distribute an interim dividend in November 2004 against the results to
September 2004, in accordance with the current dividend policy, because the
conditions for doing so, as set out in that dividend policy, were not met.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
291
M A N A G E M E N T ’ S A N A LY S I S O F T H E U N C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
F o r t h e y e a r e n d e d d e c e m b e r 31, 2 0 0 4
1. ANALYSIS O F TE U N CO NSO LI DATED FI NANCIAL STATEMENTS
1. Analysis of the Statement of Income
The company’s net income for 2004 amounted to Ch$44,408 million, signifying an increase of Ch$31,528 million over the Ch$12,780
million earned in 2003.
The following provides a comparison of each item in the statement of income:
Statement of Income (millions of Ch$)
Sales
Cost of sales
Operating margin
Admin. & selling expenses
Operating income
Income (loss) on investments in related companies
Non-operating income & expenses, net
Financial margin, net
Amortization goodwill
Price-level restatements
Exchange differences
Non-operating result
Income before taxes
Amortization negative goodwill
Net income for the year
EBITDA (*)
Earnings per share
dec-03
4.440
(1.158)
3.282
(17.444)
(14.162)
43.138
78.539
(105.512)
(51.110)
(4.537)
31.296
(8.186)
12.952
22.176
12.780
97.540
0,39
(*) Income before taxes, interest, depreciation, amortization & extraordinary items.
dec-04
Change Dec 04-03
% Change Dec 04-03
4.433
(1.101)
3.332
(17.315)
(13.983)
136.678
(5.965)
(41.108)
(51.265)
(2.132)
5.097
41.305
16.946
40
44.308
157.303
1,36
(7)
57
50
129
179
93.540
(84.504)
64.404
(155)
2.405
(26.199)
49.491
3.994
(22.136)
31.528
59.763
0,97
(0,2%)
(4,9%)
1,5%
(0,7%)
(1,3%)
216,8%
(107,6%)
(61,0%)
0,3%
(53,0%)
(83,7%)
(604,6%)
30,8%
(99,8%)
246,7%
61,3%
248,7%
The operating income showed no important changes over
2003.
The non-operating result showed an improvement of 604.6%
(Ch$49,491 million), passing from a loss of Ch$8,186 million in 2003
to a profit of Ch$41,305 million in 2004.
increase of Ch$93,540 million. This was mainly due to improved
results on investments in Chilectra, Endesa, Inmobiliaria Manso de
Velasco, Enersis Internaciona, Edesur, Distrilec, Codensa, CGTF, Cerj
and Investluz of Ch$100,531 million, offset by the weaker results of
Elesur, Synapsis IT, Cam and Distrilima of Ch$6,991 million.
The following are explanations for this:
compared to the year before.
The amortization of goodwill shows no important changes
The net financial margin showed a positive change of
Ch$64,404 million compared to the previous year, mainly due to
reduced third-party financing expenses of Ch$63,860 million and
lower net financial income and expenses with related companies
of Ch$544 million.
Investments in related companies show a net income in 2004
of Ch$136,678 million compared to Ch$43,138 million in 2003, an
Other non-operating income and expenses produced a net loss
of Ch$5,965 million in 2004, compared to net income of Ch$78,539
million in 2003, resulting in a negative change of Ch$84,504 million.
This is explained by:
a)
A reduction in the gain of sale of shares of Cía. Eléctrica del
Río Maipo of Ch$90,023 million.
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
292
b)
c)
Increase in the net loss for the fair value of bonds and US$-UF
swap derivative contracts of Ch$13,327 million.
Exchange and Interest Rate Risk Analysis
A net gain in the adjustment of investments in related
companies of Ch$2,582 million.
d) Reduction in the loss for negative equity provision of Ch$11,342
million.
Price-level restatements and exchange differences produced
a net negative change of Ch$23,794 million, passing from a gain of
Ch$26,759 million in 2003 to one of Ch$2,965 million in 2004. This
mainly arose from the effects of the nominal appreciation of the
Chilean peso against the dollar of 6.13% in 2003 compared to an
appreciation of 17.4% in 2003.
Income tax and deferred taxes show a positive change of
Ch$3,994 million due to the increase in tax losses in 2004. In 2003,
this item was offset by the charge for income tax on the sale of Río
Maipo S.A.
Amortization of negative goodwill showed a negative change
of Ch$22,136 million due to the accelerated depreciation applied to
the negative goodwill in Cerj.
2. Balance Sheet Analysis
Comparative balance sheets figures are as follows:
The company has a high proportion of its loans denominated
in US dollars as, under Chilean electricity legislation, the tariffs have
a high degree of indexation to that currency. Despite this natural
cover of an economic nature, the company, in a scenario of high
dollar volatility, has continued with its policy of partially hedging
its dollar liabilities in order to attenuate the fluctuations caused to
the results by changes in the exchange rate.
In view of the important reduction in the accounting mismatch
in recent years, which have reached prudent levels, the company has
amended its dollar-peso hedging policy and established a cash-flow
hedging policy together with a maximum accounting mismatch limit
over which hedging transactions should be carried out. At December
31, 2004, the company in unconsolidated terms has dollar-UF swaps
for an amount of US$700 million. This compares with US$219 million
in forward cover contracts (for the sale of US$) at the end of 2003.
The change is mainly due to the amendment to the hedging policy
mentioned above.
With respect to interest rate risk, the company has, in
consolidated terms, a rate of fixed to floating rate debt of
approximately 98% / 2%. The fixed-rate percentage has declined
slightly compared to the year before when it was 100%.
Assets (millions of Ch$)
Current assets
Fixed assets
Other assets
Total assets
dec-03
192,579
12,611
3,459,843
dec-04
99,300
12,176
3,418,793
(93,279)
(435)
(41,050)
3,665,033
3,530,269
(134,764)
(48.4%)
(3.4%)
(1.2%)
(3.7%)
Change 04-03
% Change 04-03
The company’s total assets reduced by Ch$134,764 million
d)
compared to December 2003, mainly due:
Reduction in capitalized expenses related to bank debt
refinancing of Ch$4,875 million and to collar contracts of
Ch$7,161 million.
a)
b)
c)
Reduction in accounts receivable from related companies at
short and long term of Ch$119,196 million, mainly in the trading
current accounts with Chilectra and Endesa of Ch$99,552
million.
Reduction in goodwill of Ch$46,751 million.
Reduction in the determination of un-realized income on
derivative contracts of Ch$7,324 million and a fall in accounts
receivable on derivative contracts due to adjustment to fair
value of Ch$1,434 million.
e) Reduction in recoverable taxes of Ch$14,844 million.
f)
g)
Reduction through the liquidation of forward contracts of
Ch$8,631 million.
Increase in the investment in related companies of Ch$23,341
million, mainly due to recognition of the result of Ch$136,678
million, net increase in the incorporation of investments of
Ch$14,284 million, compensated by recognition in reserves of
Ch$66,470 million and dividends received of Ch$64,275 million.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
293
h)
i)
j)
k)
Increase in investment in other companies of Ch$15,508 million for the liquidation in April 2004 of Luz de Bogotá.
Increase in sales under repurchase agreements of Ch$14,592 million.
Increase in deferred taxes of Ch$14,286 million.
Increase in time deposits of Ch$7,736 million.
Liabilities
Comparative balance sheets figures are as follows:
Liabilities (millions of Ch$)
Current liabilities
Long-term liabilities
Shareholders’ equity
dec-03
88,162
964,769
2,612,102
dec-04
104,334
866,382
2,559,553
Change 04-03
% change 04-03
16,172
(98,387)
(52,549)
18.3%
(10.2%)
(2.0%)
(3.7%)
Total liabilities & shareholders’ equity
3,665,033
3,530,269
(134,764)
Liabilities declined by 7.81% (Ch$82,215 million) compared to
d.
the year before due to:
Reduction in income tax payable of Ch$16,692 million and in
long-term deferred taxes of Ch$1,297 million.
a.
b.
c.
Reduction in long-term bank borrowings of Ch$109,233 million
due to the repayment of the syndicated loan for Ch$89,492
million and exchange differences of Ch$19,741 million.
e.
f.
Reduction in long-term bonds payable of Ch$51,393 million
principally due the effect of the exchange rate.
Increase in short-term accounts payable to related companies
of Ch$41,314 million.
Increase in negative equity of investments of Ch$3,210
million.
Increase in other short and long-term liabilities of Ch$55,401
million due to the spot accounting of swap and collar contracts
of Ch$56,419 million compensated by a reduction in the
determination of fair value of the derivative contracts of
Ch$1,018 million.
With respect to shareholders’ equity, this reduced by
Ch$52,549 compared to December 31, 2003. This is mainly explained
by a reduction is reserves of Ch$96,276 million, a reduction in share
premium by Ch$581 million, compensated by net income for the year
of Ch$44,308 million.
Principal indicators
Indicator
Liquidity
Debt
Current ratio
Acid test (1)
Working capital
Debt ratio
Short-term debt
Long-term debt
Financial expense coverage (2)
times
Profitability
Return on equity
Return on assets
%
%
(1) Current assets less inventories and prepaid expenses
(2) EBITDA divided by financial expenses.
Unit
times
times
dec-03
2,18
2,18
0,95
0,95
(1,23)
(1,23)
Ch$ millions
104.417
(5.034)
(109.451)
dec-04
Change 04-03 % Change 04-03
times
%
%
0,40
0,08
0,92
0,67
0,49
0,35
0,38
0,11
0,89
2,20
1,73
1,26
(0,02)
0,03
(0,03)
1,53
1,24
0,91
(56,4%)
(56,4%)
(104,8%)
(5,0%)
37,5%
(3,3%)
228,4%
253,1%
260,0%
The liquidity ratio at December 2004 was 0.95:1, a reduction
of 1.23 points compared to a year before, mainly due to the reduction
in accounts receivable from related companies.
The debt ratio was 0.38:1, a reduction by 0.02 points compared
to December 2003, mainly due to reductions in reserves and in bank
borrowings.
The return on equity reached 1.73%, compared to 0.49% the
year before, reflecting the company’s improved results for 2004.
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
294
3. Principal Cash Flows
The company generated a net positive cash flow in 2004 of Ch$22,642 million, composed as follows:
Principal Cash Flows
Flujo de Efectivo (millones de $)
Operating
Financing
Investment
Net cash flow for the year
dec-03
(90,444)
(128,317)
215,606
(3,155)
dec-04
7,324
(93,888)
109,206
22,642
Change 04-03
% Change 04-03
97,768
34,429
(106,400)
25,797
(108.1%)
(26.8%)
(49.3%)
(817.7%)
Operating activities generated a net positive flow of Ch$7,324
million, mainly comprising increases in assets and liabilities affecting
operating cash flows for Ch$22,177 million and net income for the
year of Ch$44,308 million, compensated by a credit to income not
representing cash flows of Ch$59,161 million.
Financing activities generated a net negative flow of
Ch$93,888 million, arising mainly from loan repayments of
Ch$166,967 million, loans repaid to related companies of Ch$85,249
million and other financing disbursements of Ch$2,712 million, offset
by loans to related companies of Ch$73,327 million, financing of
Ch$75,263 and other source of financing of Ch$12,644 million.
Investment activities generated a net positive cash flow of
Ch$109,206 million, mainly explained by the collection of loans
to related companies of Ch$206,915 million and other investment
income of Ch$1,222 million, offset by documented loans to related
companies of Ch$99,394 million.
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
295
II. BO O K VALU E AN D ECO N OM IC VALU E O F THE ASSE TS
The following should be mentioned with respect to the more
important assets:
The values of the fixed assets are adjusted according to the
accounting principles set by the Superintendency of Securities and
insurance (SVS) in its Circulars 550 and 566 of 1985. In the case of
the foreign company Inversiones Distrilima S.A., the fixed assets were
adjusted according to the exception criteria contained in Technical
Bulletin No.45 of the Chilean Institute of Accountants, which was in
force at the time the investment was made and was not modified by
Technical Bulletin No.51 that replaced it.
In accordance with SVS Circular 150 of January 31, 2003, the
company has evaluated at the close of the financial statements for
2002 the recoverability of assets related to its investments, applying
accounting principles generally accepted in Chile (Technical Bulletin
No.33 for fixed assets and NIC 36 for the hierarchy defined in Technical
Bulletin No.56 for the increased or decreased values related to such
investments.
Assets expressed in foreign currencies are shown at the
exchange rate current on the closing date.
Depreciation is calculated on the restated value of the assets
depending on the remaining useful lives of each asset.
Investments in financial instruments under resale agreements
are shown at their cost plus the proportion of the corresponding
interest according to the rate implied in each transaction.
Investments in related companies at shown at their equity-
method value. In the case of foreign companies, the application of
this method has been made on the financial statements prepared
in accordance with the terms of Technical Bulletins Nos.72 and 64
of the Chilean Institute of Accountants and the intangible values are
restated and amortized in accordance with Technical Bulletin No.55
of the Chilean Institute of Accountants.
Accounts and notes receivable from related companies are
classified according to their short or long-term maturities. The
operations meet conditions of equity similar to those normally
prevailing in the market.
In summary, the assets are shown in accordance with generally
accepted accounting principles and standards, and the respective
instructions issued by the SVS, as mentioned in Note 2 to the financial
statements.
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
U N C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
296
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
297
F I N A N C I A L S T A T E M E N T S
O F T H E S U B S I D I A R Y C O M P A N I E S
29 8
29 8
29 8
SUMMARIZED BALANCE SHEETS BY S U BSID IARY
SUMMARIZED STATEMENTS OF INC OME BY SU B SIDIARY
SUMMARIZED STATEMENTS OF C ASH FLOWS B Y S UBS IDIARY
F I N A N C I A L S T A T E M E N T S O F T H E S U B S I D I A R Y C O M P A N I E S
S U M M A R I Z E D B A L A N C E S H E E T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
ASSETS
Current Assets
Fixed Assets
Other Assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current Liabilities
Long Term Liabilities
Minority Interests
Capital and Reserves
Retained Earnings (Losses)
Profit (Loss) for the Period
Provisional Dividends
Surplus (Deficit) during Development Period Subsidiary
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
2004
103,642,237
365,378,293
607,978,774
2003
147,585,606
337,649,976
604,536,119
2004
16,628,423
5,337,209
1,782,292
2003
22,449,354
2,834,074
14,819
2004
31,865,484
41,075,931
5,340,445
2003
44,083,897
39,225,459
6,787,199
2004
50,575,823
15,518,341
402,602
2003
45,528,804
15,150,202
ENERSIS INTERNACIONAL
2004
2003
128,082,990
202,185,409
-
-
337,838
275,341,735
102,777,777
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
2004
38,612,783
299,896,018
4,447,473
2003
36,008,657
332,676,227
4,132,091
2004
67,952,874
615,845,170
10,014,171
2003
2004
2003
64,418,986
544,726,295
402,683,609
700,636,823
4,474,564,659
4,784,640,348
16,757,215
298,368,412
414,645,281
2004
332,427,878
733,898,792
16,231,641
2003
220,285,057
837,231,368
15,625,135
2004
2003
2004
2003
167,526,111
582,607,926
407,411,721
151,711,462
634,273,823
316,940,320
56,526,097
1,558,782,752
268,626
-
34,920
-
2004
130,662,615
550,505,055
71,102,795
2003
145,467,981
612,064,367
67,225,449
1,076,999,304
1,089,771,701
23,747,924
25,298,247
78,281,860
90,096,555
66,496,766
61,016,844
403,424,725
304,963,186
342,956,274
372,816,975
693,812,215
781,813,024
5,317,659,366
5,601,969,238
1,082,558,311
1,073,141,560
1,157,545,758
1,102,925,605
56,794,723
1,558,817,672
752,270,465
824,757,797
76,109,513
544,781,471
(1,267,798)
265,293,014
137,312,120
77,321,577
(22,550,593)
155,082,797
492,082,621
5,448,400
287,081,847
97,319,742
52,756,294
10,038,705
1,153,786
7,987
4,273,180
4,071,248
4,203,018
-
-
14,103,188
714,479
3,825
4,385,507
-
6,091,248
-
1,503,196
526,429
30,203,865
26,485,905
16,556,475
3,005,990
-
-
18,456,955
339,406
28,257,862
26,485,905
15,328,591
1,339,422
-
(111,586)
19,009,109
4,495,083
511
2,277,062
32,102,875
8,612,126
-
-
22,952,810
2,094,349
558
2,816,233
22,062,749
11,090,145
-
-
6,852,522
111,714,714
1,857,007
4,991,516
-
-
217,410,272
88,725,371
(8,248,250)
(13,029,904)
209,389,293
135,871,139
(37,606,620)
(9,539,149)
41,782,844
123,136,198
71,239,870
94,826,926
17,228,428
523,706
(5,781,698)
62,568,097
84,073,352
90,871,307
113,736,273
19,371,345
9,079,158
(6,882,557)
-
-
-
-
93,371,493
76,916,996
157,889,817
33,563,729
429,759,856
476,921,242
2,191,610,228
2,346,875,645
105,280,377
171,775,467
173,356,703
51,846,207
312,414,723
321,240,714
374,234,508
271,126,393
-
-
1,127,391,301
542,714,200
592,554,861
1,310,844,523
(2,060,651)
(17,129,823)
25,583,784
(27,779,167)
174,264,702
83,788,756
1,248,186,585
1,336,291,105
111,880,086
80,084,185
-
-
-
-
-
-
-
1,730,390
-
-
-
-
803,208,666
(54,381,330)
56,675,131
-
-
873,687,986
(44,220,494)
18,471,158
-
-
657,369,077
(102,519,561)
(30,959,195)
-
-
569,509,127
(10,701,805)
(101,242,618)
106,205
16,490,806
-
-
76,748
-
1,063,104,389
2,521,277,192
82,253,018
199,189,412
208,131,503
475,611,846
143,780,817
149,674,935
237,363,029
521,183,931
(974,776,703)
(14,605,833)
(206,421,157)
(218,345,916)
(27,388,798)
(960,170,870)
(6,494,157)
(8,898,999)
-
-
-
-
(4,250,370)
(4,250,371)
-
-
-
-
TOTAL LIABILITES AND EQUITY
1,076,999,304
1,089,771,701
23,747,924
25,298,247
78,281,860
90,096,555
66,496,766
61,016,844
403,424,725
304,963,186
342,956,274
372,816,975
693,812,215
781,813,024
5,317,659,366
5,601,969,238
1,082,558,311
1,073,141,560
1,157,545,758
1,102,925,605
56,794,723
1,558,817,672
752,270,465
824,757,797
S U M M A R I Z E D I N C O M E S T A T E M E N T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
OPERATING INCOME
Operating Incomes
Operating Costs
Administrative and Selling Expenses
NET OPERATING INCOME
NON OPERATING INCOME
Non Operating Incomes
Non Operating Expenses
Price-Level Restatement and Exchange Difference
NET NON OPERATING INCOME
Income Tax
Extraordinary Items
Minority Interests
Negative Goodwill Amotizations
Profit (Loss) for the Period
2004
483,006,118
(342,986,479)
(42,408,032)
2003
444,803,542
(314,129,073)
(35,298,554)
2004
45,447,152
(33,363,292)
(6,083,735)
2003
46,415,169
(31,089,616)
(6,369,117)
2004
10,354,398
(8,432,052)
(2,007,697)
2003
11,616,920
(10,763,819)
(1,732,943)
2004
100,424,019
(84,077,346)
(7,113,464)
2003
94,011,350
(73,623,454)
(6,305,180)
97,611,607
95,375,915
6,000,125
8,956,436
(85,351)
(879,842)
9,233,209
14,082,716
-
-
-
0
-
-
-
0
2004
2003
2004
2003
182,362,526
180,345,166
(137,720,298)
(135,622,540)
(16,818,262)
(17,526,542)
2004
208,982,945
(181,425,050)
(27,811,175)
2003
188,540,571
(165,194,774)
(28,723,783)
2004
2003
2004
2003
2004
2003
2004
2003
1,032,662,084
(629,191,426)
(34,445,488)
943,288,433
(564,207,863)
(32,106,900)
365,513,238
299,458,818
354,637,649
325,532,561
(273,374,753)
(250,770,261)
(293,145,285)
(289,209,236)
-
-
-
-
(7,689,382)
(14,113,869)
(14,600,068)
(11,198,459)
(711,378)
(1,381,430)
2004
264,357,881
(229,673,867)
(29,793,957)
2003
212,571,701
(162,021,299)
(30,374,429)
27,823,966
27,196,084
(253,280)
(5,377,986)
369,025,170
346,973,670
84,449,103
34,574,688
46,892,296
25,124,866
(711,378)
(1,381,430)
4,890,057
20,175,973
31,683,287
(65,241,275)
5,655,022
30,623,360
(105,487,380)
8,920,003
894,587
(572,591)
(126,238)
682,393
(907,427)
(74,004)
4,085,869
(463,031)
152,828
4,157,921
(2,134,701)
103,931
2,257,838
(1,020,268)
(488,633)
815,489
(982,019)
(128,317)
14,454,972
(6,622,499)
(16,080,723)
19,785,391
(1,224,070)
(56,167,941)
5,950,608
(15,677,620)
5,483,891
(8,642,149)
12,993,242
(21,800,843)
13,837,544
(23,418,836)
85,443,322
79,518,140
(273,393,890)
(272,767,441)
-
-
-
-
22,841,650
9,769,166
25,606,686
(22,224,319)
-
12,903,274
(6,401,120)
46,588,740
21,123,634
5,369,436
72,718,762
(121,962,153)
(176,042,655)
(106,989)
(1,032,111,663)
21,275,890
(36,618,226)
27,153,479
(56,008,122)
-
-
(31,937,095)
(52,717,238)
(27,902,966)
(65,944,017)
195,758
(299,038)
3,775,666
2,127,151
748,937
(294,847)
(8,248,250)
(37,606,620)
(9,727,012)
(3,158,258)
(8,807,601)
(9,581,292)
(165,108,918)
(183,480,135)
3,382,367
6,502,154
(75,373,413)
(154,919,021)
(26,674,648)
(1,012,110,139)
(15,342,336)
(28,854,643)
6,592,074
-
1,020,862
-
(424,039)
-
10,502,181
13,246,254
(1,987,537)
(2,562,534)
-
(5,328)
-
-
(3,616)
-
(520,461)
-
(163,864)
-
1,877
-
90,236
-
(1,370,073)
(2,697,648)
-
53
-
-
(76)
-
-
-
-
-
-
-
-
-
(18,747,439)
(10,650,679)
(8,068,942)
(12,819,889)
(93,426,794)
(28,062,535)
(31,156,339)
(22,605,684)
(2,478,078)
28,551,537
(2,772)
53,320,699
(3,018,774)
(4,753,517)
-
209,141
965,050
-
(5,361,554)
1,053,565
-
-
-
-
-
-
-
-
(42,802,276)
16,101,574
(71,326,105)
15,979,290
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,976,896
4,533,188
-
-
77,321,577
52,756,294
4,203,018
6,091,248
3,005,990
1,339,422
8,612,126
11,090,145
(8,248,250)
(37,606,620)
523,706
9,079,158
(17,129,823)
(27,779,167)
83,788,756
80,084,185
56,675,131
18,471,158
(30,959,195)
(101,242,618)
(27,388,798)
(960,170,870)
(6,494,157)
(8,898,999)
S U M M A R I Z E D C A S H F L O W S T A T E M E N T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
Net Positive (Negative)
Cash Flow from Operating Activities
Net Positive (Negative)
Cash Flow from Financing Activities
Net Positive (Negative)
Cash Flow from Investment Activities
110,455,638
93,668,563
967,614
3,648,462
8,560,506
11,549,995
1,135,797
12,366,699
9,597,205
10,011,304
34,676,260
52,107,924
53,865,494
51,978,892
252,265,438
287,074,115
154,742,137
41,483,418
17,862,679
87,710,005
(7,650,024)
25,542,843
36,368,966
90,743,492
(116,054,800)
9,554,406
(2,020,000)
(4,599,651)
(17,672,407)
(714,572)
(3,137,928)
(1,372,882)
(13,026,534)
(11,083,408)
(33,365,359)
(42,578,370)
(17,854,589)
(14,541,747)
(110,099,198)
(328,937,554)
10,380,649
3,351,200
40,109,960
(12,189,334)
(1,458,173,178)
52
(19,244,251)
1,646,994
(26,773,395)
(67,039,218)
762,005
899,962
9,063,106
(10,894,771)
2,514,322
(10,616,065)
1,387,077
4,490,363
(1,750,392)
(9,449,822)
(32,144,426)
(31,324,524)
(70,924,168)
114,407,462
1,513,390
(16,239,866)
(46,243,063)
(23,660,466)
1,462,215,720
(23,434,187)
(27,394,111)
(30,216,181)
NET POSITIVE (NEGATIVE) CASH FLOW FOR THE PERIOD
(32,372,557)
36,183,751
(290,381)
(51,227)
(48,795)
(59,348)
512,191
377,752
(2,042,252)
3,418,259
(439,491)
79,732
3,866,479
6,112,621
71,242,072
72,544,023
166,636,176
28,594,752
11,729,576
51,860,205
(3,607,482)
2,108,708
(10,269,396)
62,174,305
Effect of inflation on cash and cash equivalent
(1,084,860)
(799,134)
(57,731)
(12,164)
2,270
(5,177)
478,274
(157,643)
(189)
15,879
-
-
-
-
(9,101,852)
(32,002,152)
(4,286,688)
(3,143,203)
(1,127,018)
(61,655,572)
(1,523)
(176,390)
7,069,111
(45,333,514)
NET VARIATION OF CASH AND CASH EQUIVALENT
(33,457,417)
35,384,617
(348,112)
(63,391)
(46,525)
(64,525)
990,465
220,109
(2,042,441)
3,434,138
(439,491)
79,732
3,866,479
6,112,621
62,140,220
40,541,871
162,349,488
25,451,549
10,602,558
(9,795,367)
(3,609,005)
1,932,318
(3,200,285)
16,840,791
INITIAL BALANCE OF CASH AND CASH EQUIVALENT
42,662,737
7,278,120
2,353,351
2,416,742
77,145
131,069
1,866,703
1,646,594
3,480,297
46,159
1,048,650
968,918
18,695,560
12,582,939
167,737,846
127,195,975
55,779,721
30,328,172
3,760,983
13,556,350
3,661,486
1,729,168
25,279,045
8,438,254
FINAL BALANCE OF CASH AND CASH EQUIVALENT
9,205,320
42,662,737
2,005,239
2,353,351
30,620
66,544
2,857,168
1,866,703
1,437,856
3,480,297
609,159
1,048,650
22,562,039
18,695,560
229,878,066
167,737,846
218,129,209
55,779,721
14,363,541
3,760,983
52,481
3,661,486
22,078,760
25,279,045
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
F I N A N C I A L S T A T E M E N T S O F T H E S U B S I D I A R Y C O M P A N I E S
S U M M A R I Z E D B A L A N C E S H E E T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
ASSETS
Current Assets
Fixed Assets
Other Assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current Liabilities
Long Term Liabilities
Minority Interests
Capital and Reserves
Retained Earnings (Losses)
Profit (Loss) for the Period
Provisional Dividends
Surplus (Deficit) during Development Period Subsidiary
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
2004
103,642,237
365,378,293
607,978,774
2003
147,585,606
337,649,976
604,536,119
2004
16,628,423
5,337,209
1,782,292
2003
22,449,354
2,834,074
14,819
2004
31,865,484
41,075,931
5,340,445
2003
44,083,897
39,225,459
6,787,199
2004
50,575,823
15,518,341
402,602
2003
45,528,804
15,150,202
ENERSIS INTERNACIONAL
2004
2003
128,082,990
202,185,409
-
-
337,838
275,341,735
102,777,777
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
2004
38,612,783
299,896,018
4,447,473
2003
36,008,657
332,676,227
4,132,091
2004
67,952,874
615,845,170
10,014,171
2003
2004
2003
64,418,986
544,726,295
402,683,609
700,636,823
4,474,564,659
4,784,640,348
16,757,215
298,368,412
414,645,281
2004
332,427,878
733,898,792
16,231,641
2003
220,285,057
837,231,368
15,625,135
2004
2003
2004
2003
167,526,111
582,607,926
407,411,721
151,711,462
634,273,823
316,940,320
56,526,097
1,558,782,752
268,626
-
34,920
-
2004
130,662,615
550,505,055
71,102,795
2003
145,467,981
612,064,367
67,225,449
1,076,999,304
1,089,771,701
23,747,924
25,298,247
78,281,860
90,096,555
66,496,766
61,016,844
403,424,725
304,963,186
342,956,274
372,816,975
693,812,215
781,813,024
5,317,659,366
5,601,969,238
1,082,558,311
1,073,141,560
1,157,545,758
1,102,925,605
56,794,723
1,558,817,672
752,270,465
824,757,797
76,109,513
544,781,471
(1,267,798)
265,293,014
137,312,120
77,321,577
(22,550,593)
155,082,797
492,082,621
5,448,400
287,081,847
97,319,742
52,756,294
10,038,705
1,153,786
7,987
4,273,180
4,071,248
4,203,018
-
-
14,103,188
714,479
3,825
4,385,507
-
6,091,248
-
1,503,196
526,429
30,203,865
26,485,905
16,556,475
3,005,990
-
-
18,456,955
339,406
28,257,862
26,485,905
15,328,591
1,339,422
-
(111,586)
19,009,109
4,495,083
511
2,277,062
32,102,875
8,612,126
-
-
22,952,810
2,094,349
558
2,816,233
22,062,749
11,090,145
-
-
6,852,522
111,714,714
1,857,007
4,991,516
-
-
217,410,272
88,725,371
(8,248,250)
(13,029,904)
209,389,293
135,871,139
(37,606,620)
(9,539,149)
41,782,844
123,136,198
71,239,870
94,826,926
17,228,428
523,706
(5,781,698)
62,568,097
84,073,352
90,871,307
113,736,273
19,371,345
9,079,158
(6,882,557)
-
-
-
-
93,371,493
76,916,996
157,889,817
33,563,729
429,759,856
476,921,242
2,191,610,228
2,346,875,645
105,280,377
171,775,467
173,356,703
51,846,207
312,414,723
321,240,714
374,234,508
271,126,393
-
-
1,127,391,301
542,714,200
592,554,861
1,310,844,523
(2,060,651)
(17,129,823)
25,583,784
(27,779,167)
174,264,702
83,788,756
1,248,186,585
1,336,291,105
111,880,086
80,084,185
-
-
-
-
-
-
-
1,730,390
-
-
-
-
803,208,666
(54,381,330)
56,675,131
-
-
873,687,986
(44,220,494)
18,471,158
-
-
657,369,077
(102,519,561)
(30,959,195)
-
-
569,509,127
(10,701,805)
(101,242,618)
106,205
16,490,806
-
-
76,748
-
1,063,104,389
2,521,277,192
82,253,018
199,189,412
208,131,503
475,611,846
143,780,817
149,674,935
237,363,029
521,183,931
(974,776,703)
(14,605,833)
(206,421,157)
(218,345,916)
(27,388,798)
(960,170,870)
(6,494,157)
(8,898,999)
-
-
-
-
(4,250,370)
(4,250,371)
-
-
-
-
TOTAL LIABILITES AND EQUITY
1,076,999,304
1,089,771,701
23,747,924
25,298,247
78,281,860
90,096,555
66,496,766
61,016,844
403,424,725
304,963,186
342,956,274
372,816,975
693,812,215
781,813,024
5,317,659,366
5,601,969,238
1,082,558,311
1,073,141,560
1,157,545,758
1,102,925,605
56,794,723
1,558,817,672
752,270,465
824,757,797
S U M M A R I Z E D I N C O M E S T A T E M E N T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
OPERATING INCOME
Operating Incomes
Operating Costs
Administrative and Selling Expenses
NET OPERATING INCOME
NON OPERATING INCOME
Non Operating Incomes
Non Operating Expenses
Price-Level Restatement and Exchange Difference
NET NON OPERATING INCOME
Income Tax
Extraordinary Items
Minority Interests
Negative Goodwill Amotizations
Profit (Loss) for the Period
2004
483,006,118
(342,986,479)
(42,408,032)
2003
444,803,542
(314,129,073)
(35,298,554)
2004
45,447,152
(33,363,292)
(6,083,735)
2003
46,415,169
(31,089,616)
(6,369,117)
2004
10,354,398
(8,432,052)
(2,007,697)
2003
11,616,920
(10,763,819)
(1,732,943)
2004
100,424,019
(84,077,346)
(7,113,464)
2003
94,011,350
(73,623,454)
(6,305,180)
97,611,607
95,375,915
6,000,125
8,956,436
(85,351)
(879,842)
9,233,209
14,082,716
-
-
-
0
-
-
-
0
2004
2003
2004
2003
182,362,526
180,345,166
(137,720,298)
(135,622,540)
(16,818,262)
(17,526,542)
2004
208,982,945
(181,425,050)
(27,811,175)
2003
188,540,571
(165,194,774)
(28,723,783)
2004
2003
2004
2003
2004
2003
2004
2003
1,032,662,084
(629,191,426)
(34,445,488)
943,288,433
(564,207,863)
(32,106,900)
365,513,238
299,458,818
354,637,649
325,532,561
(273,374,753)
(250,770,261)
(293,145,285)
(289,209,236)
-
-
-
-
(7,689,382)
(14,113,869)
(14,600,068)
(11,198,459)
(711,378)
(1,381,430)
2004
264,357,881
(229,673,867)
(29,793,957)
2003
212,571,701
(162,021,299)
(30,374,429)
27,823,966
27,196,084
(253,280)
(5,377,986)
369,025,170
346,973,670
84,449,103
34,574,688
46,892,296
25,124,866
(711,378)
(1,381,430)
4,890,057
20,175,973
31,683,287
(65,241,275)
5,655,022
30,623,360
(105,487,380)
8,920,003
894,587
(572,591)
(126,238)
682,393
(907,427)
(74,004)
4,085,869
(463,031)
152,828
4,157,921
(2,134,701)
103,931
2,257,838
(1,020,268)
(488,633)
815,489
(982,019)
(128,317)
14,454,972
(6,622,499)
(16,080,723)
19,785,391
(1,224,070)
(56,167,941)
5,950,608
(15,677,620)
5,483,891
(8,642,149)
12,993,242
(21,800,843)
13,837,544
(23,418,836)
85,443,322
79,518,140
(273,393,890)
(272,767,441)
-
-
-
-
22,841,650
9,769,166
25,606,686
(22,224,319)
-
12,903,274
(6,401,120)
46,588,740
21,123,634
5,369,436
72,718,762
(121,962,153)
(176,042,655)
(106,989)
(1,032,111,663)
21,275,890
(36,618,226)
27,153,479
(56,008,122)
-
-
(31,937,095)
(52,717,238)
(27,902,966)
(65,944,017)
195,758
(299,038)
3,775,666
2,127,151
748,937
(294,847)
(8,248,250)
(37,606,620)
(9,727,012)
(3,158,258)
(8,807,601)
(9,581,292)
(165,108,918)
(183,480,135)
3,382,367
6,502,154
(75,373,413)
(154,919,021)
(26,674,648)
(1,012,110,139)
(15,342,336)
(28,854,643)
6,592,074
-
1,020,862
-
(424,039)
-
10,502,181
13,246,254
(1,987,537)
(2,562,534)
-
(5,328)
-
-
(3,616)
-
(520,461)
-
(163,864)
-
1,877
-
90,236
-
(1,370,073)
(2,697,648)
-
53
-
-
(76)
-
-
-
-
-
-
-
-
-
(18,747,439)
(10,650,679)
(8,068,942)
(12,819,889)
(93,426,794)
(28,062,535)
(31,156,339)
(22,605,684)
(2,478,078)
28,551,537
(2,772)
53,320,699
(3,018,774)
(4,753,517)
-
209,141
965,050
-
(5,361,554)
1,053,565
-
-
-
-
-
-
-
-
(42,802,276)
16,101,574
(71,326,105)
15,979,290
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,976,896
4,533,188
-
-
77,321,577
52,756,294
4,203,018
6,091,248
3,005,990
1,339,422
8,612,126
11,090,145
(8,248,250)
(37,606,620)
523,706
9,079,158
(17,129,823)
(27,779,167)
83,788,756
80,084,185
56,675,131
18,471,158
(30,959,195)
(101,242,618)
(27,388,798)
(960,170,870)
(6,494,157)
(8,898,999)
S U M M A R I Z E D C A S H F L O W S T A T E M E N T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
Net Positive (Negative)
Cash Flow from Operating Activities
Net Positive (Negative)
Cash Flow from Financing Activities
Net Positive (Negative)
Cash Flow from Investment Activities
110,455,638
93,668,563
967,614
3,648,462
8,560,506
11,549,995
1,135,797
12,366,699
9,597,205
10,011,304
34,676,260
52,107,924
53,865,494
51,978,892
252,265,438
287,074,115
154,742,137
41,483,418
17,862,679
87,710,005
(7,650,024)
25,542,843
36,368,966
90,743,492
(116,054,800)
9,554,406
(2,020,000)
(4,599,651)
(17,672,407)
(714,572)
(3,137,928)
(1,372,882)
(13,026,534)
(11,083,408)
(33,365,359)
(42,578,370)
(17,854,589)
(14,541,747)
(110,099,198)
(328,937,554)
10,380,649
3,351,200
40,109,960
(12,189,334)
(1,458,173,178)
52
(19,244,251)
1,646,994
(26,773,395)
(67,039,218)
762,005
899,962
9,063,106
(10,894,771)
2,514,322
(10,616,065)
1,387,077
4,490,363
(1,750,392)
(9,449,822)
(32,144,426)
(31,324,524)
(70,924,168)
114,407,462
1,513,390
(16,239,866)
(46,243,063)
(23,660,466)
1,462,215,720
(23,434,187)
(27,394,111)
(30,216,181)
NET POSITIVE (NEGATIVE) CASH FLOW FOR THE PERIOD
(32,372,557)
36,183,751
(290,381)
(51,227)
(48,795)
(59,348)
512,191
377,752
(2,042,252)
3,418,259
(439,491)
79,732
3,866,479
6,112,621
71,242,072
72,544,023
166,636,176
28,594,752
11,729,576
51,860,205
(3,607,482)
2,108,708
(10,269,396)
62,174,305
Effect of inflation on cash and cash equivalent
(1,084,860)
(799,134)
(57,731)
(12,164)
2,270
(5,177)
478,274
(157,643)
(189)
15,879
-
-
-
-
(9,101,852)
(32,002,152)
(4,286,688)
(3,143,203)
(1,127,018)
(61,655,572)
(1,523)
(176,390)
7,069,111
(45,333,514)
NET VARIATION OF CASH AND CASH EQUIVALENT
(33,457,417)
35,384,617
(348,112)
(63,391)
(46,525)
(64,525)
990,465
220,109
(2,042,441)
3,434,138
(439,491)
79,732
3,866,479
6,112,621
62,140,220
40,541,871
162,349,488
25,451,549
10,602,558
(9,795,367)
(3,609,005)
1,932,318
(3,200,285)
16,840,791
INITIAL BALANCE OF CASH AND CASH EQUIVALENT
42,662,737
7,278,120
2,353,351
2,416,742
77,145
131,069
1,866,703
1,646,594
3,480,297
46,159
1,048,650
968,918
18,695,560
12,582,939
167,737,846
127,195,975
55,779,721
30,328,172
3,760,983
13,556,350
3,661,486
1,729,168
25,279,045
8,438,254
FINAL BALANCE OF CASH AND CASH EQUIVALENT
9,205,320
42,662,737
2,005,239
2,353,351
30,620
66,544
2,857,168
1,866,703
1,437,856
3,480,297
609,159
1,048,650
22,562,039
18,695,560
229,878,066
167,737,846
218,129,209
55,779,721
14,363,541
3,760,983
52,481
3,661,486
22,078,760
25,279,045
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
F I N A N C I A L S T A T E M E N T S O F T H E S U B S I D I A R Y C O M P A N I E S
S U M M A R I Z E D B A L A N C E S H E E T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
ASSETS
Current Assets
Fixed Assets
Other Assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current Liabilities
Long Term Liabilities
Minority Interests
Capital and Reserves
Retained Earnings (Losses)
Profit (Loss) for the Period
Provisional Dividends
Surplus (Deficit) during Development Period Subsidiary
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
2004
103,642,237
365,378,293
607,978,774
2003
147,585,606
337,649,976
604,536,119
2004
16,628,423
5,337,209
1,782,292
2003
22,449,354
2,834,074
14,819
2004
31,865,484
41,075,931
5,340,445
2003
44,083,897
39,225,459
6,787,199
2004
50,575,823
15,518,341
402,602
2003
45,528,804
15,150,202
ENERSIS INTERNACIONAL
2004
2003
128,082,990
202,185,409
-
-
337,838
275,341,735
102,777,777
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
2004
38,612,783
299,896,018
4,447,473
2003
36,008,657
332,676,227
4,132,091
2004
67,952,874
615,845,170
10,014,171
2003
2004
2003
64,418,986
544,726,295
402,683,609
700,636,823
4,474,564,659
4,784,640,348
16,757,215
298,368,412
414,645,281
2004
332,427,878
733,898,792
16,231,641
2003
220,285,057
837,231,368
15,625,135
2004
2003
2004
2003
167,526,111
582,607,926
407,411,721
151,711,462
634,273,823
316,940,320
56,526,097
1,558,782,752
268,626
-
34,920
-
2004
130,662,615
550,505,055
71,102,795
2003
145,467,981
612,064,367
67,225,449
1,076,999,304
1,089,771,701
23,747,924
25,298,247
78,281,860
90,096,555
66,496,766
61,016,844
403,424,725
304,963,186
342,956,274
372,816,975
693,812,215
781,813,024
5,317,659,366
5,601,969,238
1,082,558,311
1,073,141,560
1,157,545,758
1,102,925,605
56,794,723
1,558,817,672
752,270,465
824,757,797
76,109,513
544,781,471
(1,267,798)
265,293,014
137,312,120
77,321,577
(22,550,593)
155,082,797
492,082,621
5,448,400
287,081,847
97,319,742
52,756,294
10,038,705
1,153,786
7,987
4,273,180
4,071,248
4,203,018
-
-
14,103,188
714,479
3,825
4,385,507
-
6,091,248
-
1,503,196
526,429
30,203,865
26,485,905
16,556,475
3,005,990
-
-
18,456,955
339,406
28,257,862
26,485,905
15,328,591
1,339,422
-
(111,586)
19,009,109
4,495,083
511
2,277,062
32,102,875
8,612,126
-
-
22,952,810
2,094,349
558
2,816,233
22,062,749
11,090,145
-
-
6,852,522
111,714,714
1,857,007
4,991,516
-
-
217,410,272
88,725,371
(8,248,250)
(13,029,904)
209,389,293
135,871,139
(37,606,620)
(9,539,149)
41,782,844
123,136,198
71,239,870
94,826,926
17,228,428
523,706
(5,781,698)
62,568,097
84,073,352
90,871,307
113,736,273
19,371,345
9,079,158
(6,882,557)
-
-
-
-
93,371,493
76,916,996
157,889,817
33,563,729
429,759,856
476,921,242
2,191,610,228
2,346,875,645
105,280,377
171,775,467
173,356,703
51,846,207
312,414,723
321,240,714
374,234,508
271,126,393
-
-
1,127,391,301
542,714,200
592,554,861
1,310,844,523
(2,060,651)
(17,129,823)
25,583,784
(27,779,167)
174,264,702
83,788,756
1,248,186,585
1,336,291,105
111,880,086
80,084,185
-
-
-
-
-
-
-
1,730,390
-
-
-
-
803,208,666
(54,381,330)
56,675,131
-
-
873,687,986
(44,220,494)
18,471,158
-
-
657,369,077
(102,519,561)
(30,959,195)
-
-
569,509,127
(10,701,805)
(101,242,618)
106,205
16,490,806
-
-
76,748
-
1,063,104,389
2,521,277,192
82,253,018
199,189,412
208,131,503
475,611,846
143,780,817
149,674,935
237,363,029
521,183,931
(974,776,703)
(14,605,833)
(206,421,157)
(218,345,916)
(27,388,798)
(960,170,870)
(6,494,157)
(8,898,999)
-
-
-
-
(4,250,370)
(4,250,371)
-
-
-
-
TOTAL LIABILITES AND EQUITY
1,076,999,304
1,089,771,701
23,747,924
25,298,247
78,281,860
90,096,555
66,496,766
61,016,844
403,424,725
304,963,186
342,956,274
372,816,975
693,812,215
781,813,024
5,317,659,366
5,601,969,238
1,082,558,311
1,073,141,560
1,157,545,758
1,102,925,605
56,794,723
1,558,817,672
752,270,465
824,757,797
S U M M A R I Z E D I N C O M E S T A T E M E N T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
OPERATING INCOME
Operating Incomes
Operating Costs
Administrative and Selling Expenses
NET OPERATING INCOME
NON OPERATING INCOME
Non Operating Incomes
Non Operating Expenses
Price-Level Restatement and Exchange Difference
NET NON OPERATING INCOME
Income Tax
Extraordinary Items
Minority Interests
Negative Goodwill Amotizations
Profit (Loss) for the Period
2004
483,006,118
(342,986,479)
(42,408,032)
2003
444,803,542
(314,129,073)
(35,298,554)
2004
45,447,152
(33,363,292)
(6,083,735)
2003
46,415,169
(31,089,616)
(6,369,117)
2004
10,354,398
(8,432,052)
(2,007,697)
2003
11,616,920
(10,763,819)
(1,732,943)
2004
100,424,019
(84,077,346)
(7,113,464)
2003
94,011,350
(73,623,454)
(6,305,180)
97,611,607
95,375,915
6,000,125
8,956,436
(85,351)
(879,842)
9,233,209
14,082,716
-
-
-
0
-
-
-
0
2004
2003
2004
2003
182,362,526
180,345,166
(137,720,298)
(135,622,540)
(16,818,262)
(17,526,542)
2004
208,982,945
(181,425,050)
(27,811,175)
2003
188,540,571
(165,194,774)
(28,723,783)
2004
2003
2004
2003
2004
2003
2004
2003
1,032,662,084
(629,191,426)
(34,445,488)
943,288,433
(564,207,863)
(32,106,900)
365,513,238
299,458,818
354,637,649
325,532,561
(273,374,753)
(250,770,261)
(293,145,285)
(289,209,236)
-
-
-
-
(7,689,382)
(14,113,869)
(14,600,068)
(11,198,459)
(711,378)
(1,381,430)
2004
264,357,881
(229,673,867)
(29,793,957)
2003
212,571,701
(162,021,299)
(30,374,429)
27,823,966
27,196,084
(253,280)
(5,377,986)
369,025,170
346,973,670
84,449,103
34,574,688
46,892,296
25,124,866
(711,378)
(1,381,430)
4,890,057
20,175,973
31,683,287
(65,241,275)
5,655,022
30,623,360
(105,487,380)
8,920,003
894,587
(572,591)
(126,238)
682,393
(907,427)
(74,004)
4,085,869
(463,031)
152,828
4,157,921
(2,134,701)
103,931
2,257,838
(1,020,268)
(488,633)
815,489
(982,019)
(128,317)
14,454,972
(6,622,499)
(16,080,723)
19,785,391
(1,224,070)
(56,167,941)
5,950,608
(15,677,620)
5,483,891
(8,642,149)
12,993,242
(21,800,843)
13,837,544
(23,418,836)
85,443,322
79,518,140
(273,393,890)
(272,767,441)
-
-
-
-
22,841,650
9,769,166
25,606,686
(22,224,319)
-
12,903,274
(6,401,120)
46,588,740
21,123,634
5,369,436
72,718,762
(121,962,153)
(176,042,655)
(106,989)
(1,032,111,663)
21,275,890
(36,618,226)
27,153,479
(56,008,122)
-
-
(31,937,095)
(52,717,238)
(27,902,966)
(65,944,017)
195,758
(299,038)
3,775,666
2,127,151
748,937
(294,847)
(8,248,250)
(37,606,620)
(9,727,012)
(3,158,258)
(8,807,601)
(9,581,292)
(165,108,918)
(183,480,135)
3,382,367
6,502,154
(75,373,413)
(154,919,021)
(26,674,648)
(1,012,110,139)
(15,342,336)
(28,854,643)
6,592,074
-
1,020,862
-
(424,039)
-
10,502,181
13,246,254
(1,987,537)
(2,562,534)
-
(5,328)
-
-
(3,616)
-
(520,461)
-
(163,864)
-
1,877
-
90,236
-
(1,370,073)
(2,697,648)
-
53
-
-
(76)
-
-
-
-
-
-
-
-
-
(18,747,439)
(10,650,679)
(8,068,942)
(12,819,889)
(93,426,794)
(28,062,535)
(31,156,339)
(22,605,684)
(2,478,078)
28,551,537
(2,772)
53,320,699
(3,018,774)
(4,753,517)
-
209,141
965,050
-
(5,361,554)
1,053,565
-
-
-
-
-
-
-
-
(42,802,276)
16,101,574
(71,326,105)
15,979,290
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,976,896
4,533,188
-
-
77,321,577
52,756,294
4,203,018
6,091,248
3,005,990
1,339,422
8,612,126
11,090,145
(8,248,250)
(37,606,620)
523,706
9,079,158
(17,129,823)
(27,779,167)
83,788,756
80,084,185
56,675,131
18,471,158
(30,959,195)
(101,242,618)
(27,388,798)
(960,170,870)
(6,494,157)
(8,898,999)
S U M M A R I Z E D C A S H F L O W S T A T E M E N T S B Y S U B S I D I A R Y
A s o f D e c e m b e r 31, 2 0 0 4 a n d 2 0 0 3 i n t h o u s a n d s o f C h i l e a n P e s o s
CHILECTRA
SYNAPSIS
I. MANSO DE VELASCO
CAM
ENERSIS INTERNACIONAL
DISTRILIMA
EDESUR
ENDESA CHILE
CODENSA
CERJ
ELESUR
INVESTLUZ
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
2004
2003
Net Positive (Negative)
Cash Flow from Operating Activities
Net Positive (Negative)
Cash Flow from Financing Activities
Net Positive (Negative)
Cash Flow from Investment Activities
110,455,638
93,668,563
967,614
3,648,462
8,560,506
11,549,995
1,135,797
12,366,699
9,597,205
10,011,304
34,676,260
52,107,924
53,865,494
51,978,892
252,265,438
287,074,115
154,742,137
41,483,418
17,862,679
87,710,005
(7,650,024)
25,542,843
36,368,966
90,743,492
(116,054,800)
9,554,406
(2,020,000)
(4,599,651)
(17,672,407)
(714,572)
(3,137,928)
(1,372,882)
(13,026,534)
(11,083,408)
(33,365,359)
(42,578,370)
(17,854,589)
(14,541,747)
(110,099,198)
(328,937,554)
10,380,649
3,351,200
40,109,960
(12,189,334)
(1,458,173,178)
52
(19,244,251)
1,646,994
(26,773,395)
(67,039,218)
762,005
899,962
9,063,106
(10,894,771)
2,514,322
(10,616,065)
1,387,077
4,490,363
(1,750,392)
(9,449,822)
(32,144,426)
(31,324,524)
(70,924,168)
114,407,462
1,513,390
(16,239,866)
(46,243,063)
(23,660,466)
1,462,215,720
(23,434,187)
(27,394,111)
(30,216,181)
NET POSITIVE (NEGATIVE) CASH FLOW FOR THE PERIOD
(32,372,557)
36,183,751
(290,381)
(51,227)
(48,795)
(59,348)
512,191
377,752
(2,042,252)
3,418,259
(439,491)
79,732
3,866,479
6,112,621
71,242,072
72,544,023
166,636,176
28,594,752
11,729,576
51,860,205
(3,607,482)
2,108,708
(10,269,396)
62,174,305
Effect of inflation on cash and cash equivalent
(1,084,860)
(799,134)
(57,731)
(12,164)
2,270
(5,177)
478,274
(157,643)
(189)
15,879
-
-
-
-
(9,101,852)
(32,002,152)
(4,286,688)
(3,143,203)
(1,127,018)
(61,655,572)
(1,523)
(176,390)
7,069,111
(45,333,514)
NET VARIATION OF CASH AND CASH EQUIVALENT
(33,457,417)
35,384,617
(348,112)
(63,391)
(46,525)
(64,525)
990,465
220,109
(2,042,441)
3,434,138
(439,491)
79,732
3,866,479
6,112,621
62,140,220
40,541,871
162,349,488
25,451,549
10,602,558
(9,795,367)
(3,609,005)
1,932,318
(3,200,285)
16,840,791
INITIAL BALANCE OF CASH AND CASH EQUIVALENT
42,662,737
7,278,120
2,353,351
2,416,742
77,145
131,069
1,866,703
1,646,594
3,480,297
46,159
1,048,650
968,918
18,695,560
12,582,939
167,737,846
127,195,975
55,779,721
30,328,172
3,760,983
13,556,350
3,661,486
1,729,168
25,279,045
8,438,254
FINAL BALANCE OF CASH AND CASH EQUIVALENT
9,205,320
42,662,737
2,005,239
2,353,351
30,620
66,544
2,857,168
1,866,703
1,437,856
3,480,297
609,159
1,048,650
22,562,039
18,695,560
229,878,066
167,737,846
218,129,209
55,779,721
14,363,541
3,760,983
52,481
3,661,486
22,078,760
25,279,045
A N N U A L R E P O R T 2 0 0 4 / E N E R S I S
F I N A N C I A L S T A T E M E N T S O F T H E S U B S I D I A R Y C O M P A N I E S
2 0 0 4 A N N U A L R E P O R T / E N E R S I S
Enersis Management
CHAIRMAN
Pablo Yrarrázaval
Phone (56-2) 353 4663
CHIEF EXECUTIVE OFFICER
Mario Valcarce
Phone (56-2) 353 4613
REGIONAL PLANNING AND CONTROL OFFICER
Macarena Lama
Phone (56-2) 353 4684
REGIONAL FINANCIAL OFFICER
Alfredo Ergas
Phone (56-2) 630 9587
REGIONAL ACCOUNTING OFFICER
Fernando Isac
Phone (56-2) 353 4685
COMMUNICATIONS OFFICER
José L. Domínguez
Phone (56-2) 353 4666
AUDITING OFFICER
Francisco Herrera
Phone (56-2) 353 4647
HUMAN RESOURCES OFFICER
Francisco Silva
Phone(56-2) 353 4610
GENERAL COUNSEL
Domingo Valdés
Phone (56-2) 353 4631
Investor and Shareholder Relations
CHIEF INVESTMENTS AND RISKS OFFICER
Ricardo Alvial
Phone (56-2) 353 4682
CITIBANK NY
Ricardo Szlezinger
Phone (1-212) 816 6852
SANTANDER CENTRAL HISPANO INVESTMENT
Enrique Romero
Phone (34-91) 342 9681
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2
Santa Rosa 76, Santiago - Chile
(56 2) 353 4400, (56 2) 378 4400
Fax: (56 2) 378 4788
w w w. e n e r s i s . c l